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(BTO flats) demand for flats

Source:

http://www.tnp.sg/news/singapore/housing-supply-steady-17000-bto-flats-2018

http://www.todayonline.com/singapore/hdb-launch-17000-new-flats-2018-keeping-supply-steady

http://www.straitstimes.com/business/property/hdb-resale-flat-prices-drop-15-in-2017-after-02-dip-in-q4-flash-data

Source (reference):

http://www.straitstimes.com/singapore/housing/hdb-to-launch-17000-new-flats-next-year

https://www.srx.com.sg/singapore-property-news/31792/demand-for-hdb-resale-flats-expected-to-remain-strong-this-year (not within date requirement, use as reference)

http://www.straitstimes.com/singapore/housing/keeping-supply-of-homes-steady (HDB resale market, launch about 17,000 Build-To-Order (BTO) flats

https://www.srx.com.sg/singapore-property-news/44932/hdb-resale-prices-inch-up-01-in-december-as-volume-drops-nearly-20

http://www.businesstimes.com.sg/hub-projects/property-2017-sept-issue/hdb-resale-market-abuzz-with-activity

https://www.srx.com.sg/ask-home-prof/44782/bto-vs-hdb-resale-2017
(BTO VS RESALE)

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For the third year running, about 17,000 Build-to-Order (BTO) flats will be launched next year, Minister for National Development Lawrence Wong announced yesterday.

In his blog post yesterday, titled Another Fruitful Year for Public Housing, he said his ministry will continue to watch housing demands and trends.

"We will continue to calibrate our flat supply carefully, taking into account underlying demand and the stability of the HDB resale market," he added.

Mr Wong said potential buyers can expect a "good spread of projects across mature and non-mature estates" - including the new Tengah town, the first time flats will be launched there.

Industry watchers said buyers might not see Tengah's appeal now, but with its location near the upcoming Jurong Innovation District and its car-free town centre, it is expected to grow in popularity.

ERA Realty's key executive officer Eugene Lim told The Straits Times: "Demand may be a little slow at the beginning, especially when buyers also have choices from other more established housing estates.

"However, as the development of the new town progresses, we should be seeing increased demand for the flats there."

From June next year, flats will also be launched in Sembawang, Yishun and Sengkang, with a shorter wait time of 2½ years, compared with the typical three to four years.

Property experts said the figure of 17,000 reflects the Government's commitment to providing affordable and adequate housing to first-time buyers.

ZACD Group executive director Nicholas Mak told The New Paper the figure was not surprising.

Though demand for BTO flats dipped slightly this year, he said the Government is making sure to "meet the needs of the population" and assure them they can get a unit of their choice.

Mr Wong also pointed to several government initiatives to help first-timer families acquire homes.

In February this year, the Central Provident Fund Housing Grant was increased from $30,000 to $40,000 or $50,000 to allow first-timer couples to better afford a flat on the open market.

About 6,900 first-timer households have benefited from this enhanced grant, he said.

Rental subsidies for the Parenthood Provisional Housing Scheme, where vacated HDB flats are rented to couples waiting for their new flats, were raised as well. This has benefited about 840 households.

In August, the Housing Board launched its first Re-offer of Balance Flats (ROF) exercise for those with urgent housing needs. Around 800 households have booked a flat in the exercise, which is ongoing, Mr Wong said.

ROF, which features unsold flats from previous Sale of Balance Flats exercises, will be held twice yearly.

Said Mr Wong: "All this means that young couples will have even more affordable and accessible housing options to start their marriage and parenthood journey early."

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Housing supply steady with 17,000 BTO flats in 2018

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For the third year running, about 17,000 Build-to-Order (BTO) flats will be launched next year, Minister for National Development Lawrence Wong announced yesterday. In his blog post yesterday, titled Another Fruitful Year for Public Housing, he said his ministry will...

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HDB to launch 17,000 new flats in 2018, keeping supply steady

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SINGAPORE - The Housing and Development Board (HDB) will put up 17,000 new flats for sale in 2018, slightly fewer than the 17,584 flats launched in 2017. Minister for National Development Lawrence Wong made the announcement on Thursday (Dec 14). Home hunters can expect a

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SINGAPORE - HDB resale prices edged down 0.2 per cent in the final quarter of last year, making for a full-year price drop of 1.5 per cent, according to flash estimates from the Housing and Development Board (HDB) on Tuesday (Jan 2).

This means the decline in HDB resale prices last year was steeper than the 0.2 per cent dip in 2016.

HDB also said on Tuesday that it will launch its first Build-To Order (BTO) exercise for 2018 in February, with an offering of about 3,600 flats in Choa Chu Kang, Geylang, Tampines and Woodlands.

As announced last month, HDB said the total BTO flat supply for 2018 will be about 17,000 units, keeping the supply of flats on a par with last year's.

Commenting on the latest HDB data, PropNex Realty's chief executive Ismail Gafoor said the price decline in 2017 was mostly due to the greater number of HDB owners selling their properties in pursuit of upgrading to private property this year.

He noted that while the figures make for a fifth straight quarter of decline, the 0.2 per cent dip in the fourth quarter was "encouraging", when compared with the 0.7 per cent drop in the previous quarter.

"With the positive sentiment in residential market as well as huge number of en bloc sales in 2017, we reckon a greater demand for HDB resale properties with some en bloc owners considering resale flats. There is a likelihood that HDB prices may well experience a positive growth of 1 to 2 per cent in 2018," said Mr Ismail.

ERA Realty key executive officer Eugene Lim said he expects HDB resales to stabilise, with any price increase in 2018 not likely to exceed 1 per cent for the full year.

He noted a series of developments in 2017 that have likely impacted demand for HDB resale flats, such as the increase in housing grants, the shorter waiting time for BTO flats in certain housing estates and the introduction of the Re-offer of Balance flats.

There was also the impact of comments last year from Minister for National Development Lawrence Wong that not all HDB flats will be chosen for the Selective En bloc Redevelopment Scheme and that those flats which are not selected will eventually have to be returned to the state.

Said Mr Lim: "The increased awareness of this stark reality has made older resale HDB flats less appealing to home buyers who have longer term considerations."

Still, ERA said it expects resale flats to be popular among buyers who are not eligible for new flats or have urgent housing needs.

ERA also expects more resale HDB transactions in 2018, with the introduction of the HDB Resale Portal, which can halve the processing time for resale HDB flats from 16 weeks to eight weeks.

But with the new resale portal, buyers remain price sensitive and would want to ensure that the price they have negotiated and agreed with the seller is at a value that can be confirmed by HDB as the market value, ERA noted.

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HDB resale flat prices drop 1.5% in 2017 after 0.2% dip in Q4: Flash data

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SINGAPORE - HDB resale prices edged down 0.2 per cent in the final quarter of last year, making for a full-year price drop of 1.5 per cent, according to flash estimates from the Housing and Development Board (HDB) on Tuesday (Jan 2).. Read more at straitstimes.com.

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Scarce Resources: Scarce resources, land, entrepreneurship, labour

Q: Will building more houses cause negative or positive spillovers?

A: Negative Spillovers - More demand for public infrastructure, Traffic congestion, Environmental effect (Noise pollution), Land would be even more limited

Positive Spillovers - more people living in an area increasing the employment and income in those areas

"If the resale and private housing prices continue to increase in 2018 due partly to the demand from en bloc owners, we may expect spillovers to occur from the resale and private housing markets to the BTO markets"

Negative/positive spillover for change in price in Resale and Private housing:

(will talk about how the increase in price of Resale and private housing market will affect BTO market)

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Demand for BTO (Van & Yvonne article)

“Demand may be a little slow at the beginning, especially when buyers also have choices from other more established housing estates.”

Price of related goods (Substitutes of BTO: Resale HDB, landed or private property, condo) More choices from more established housing estates, more substitutes available to consumers.

Consumers may prefer (Taste and preferences) to stay in houses in other estates. Media reports/Advertisements of other houses may influence tastes and preferences of consumers. Leading demand for BTO flats to shift left.

Quantity demanded for BTO (Van and Yvonne article)

“Central Provident Fund Housing Grant was increased from $30,000 to $40,000 or $50,000 to allow first-timer couples to better afford a flat on the open market.”

Quantity demanded for first timer couples: or first timer couples: price decrease due to government subsidies and grants (ELABORATE SUBSIDIES AND GRANTS) leading to QD increase

Eg of subsidies and grants: Rental subsidies

Demand for BTO (Neke and Mel)

1. Location

Four and five room flats in mature estates, flats near mrt stations (mainly four room flats) are highly sought after.

Demand determinant: Taste and Preferences; people prioritise factors such as convenience and transport when buying flats.

In addition, location is a major factor of consideration when purchasing a flat.

2.  Central Provident Fund (CPF) Housing Grant

"The Central Provident Fund (CPF) Housing Grant was increased from S$30,000 to S$40,000/S$50,000 to allow first-timer couples the ability to buy a flat on the open market more affordably. Now, these couples can now receive up to S$110,000 in grants when buying a resale flat.."

Allows couples to afford new flats and resale flats more easily.

Demand determinant: No. of buyers; More affordable, more of them will buy.

3. Parenthood Provisional Housing Scheme

Allows for couples to better afford rental expenses while waiting for their new flat.

Affordable, more people will apply for this scheme, more people will buy flats.

Demand for Resale Houses (LX and QL)

“With the positive sentiment in residential market as well as huge number of en bloc sales in 2017, we reckon a greater demand for HDB resale properties with some en bloc owners considering resale flats. There is a likelihood that HDB prices may well experience a positive growth of 1 to 2 per cent in 2018,”

Number of buyers in the market:
Demand for HDB resale properties is expected to rise 1-2% in 2018 due to huge number of en bloc sales, thus en bloc owners eyeing on resale flats

“With the positive sentiment in residential market as well as huge number of en bloc sales in 2017, we reckon a greater demand for HDB resale properties with some en bloc owners considering resale flats”

Expectation of buyers

Demand for HDB resale is expected to increase due to optimistic expectation of the buyers

"...likely impacted demand for HDB resale flats, such as the increase in housing grants…”

Price of Related Goods - Substitutes

Due to increase in housing grants for HDB resale flats, demand for HDB resale flats have increased as people buy the relatively cheaper HDB resale flats instead of other property flats (BTO and private properties, etc.)

“a series of developments in 2017 that have likely impacted demand for HDB resale flats, such as the increase in housing grants, the shorter waiting time for BTO flats in certain housing estates and the introduction of the Re-offer of Balance flats.”

Tastes and Preferences

Due to decrease in waiting time for BTO flats, demand for HDB resale flats decrease as more people may prefer buying BTO flats which are new, instead of buying and HDB resale flats.

Tastes and Preferences

Due to the introduction of Re-offer of Balance flats, people who are urgently looking for a house or have no particular preference about housing location and attributes are most likely to demand for Re-offer of the Balance flats, instead of buying a HDB resale flat which takes time to process. Thus, demand for HDB resale flats decreased.

Tastes and Preferences:
Demand for HDB flats decrease as more HDB owners prefer private property, thus higher number of resale flats in the property industry, decreasing resale prices.

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Supply for BTO flats (Melody and neke)

“The Housing and Development Board (HDB) will put up 17,000 new flats for sale in 2018, slightly fewer than the 17,584 flats launched in 2017.”

Supply of BTO decreased slightly

“they noted that while there is a risk of oversupply in the private residential market”

Due to the risk of oversupply of private residential flats, there is a need to want to maintain the consistent supply of flats but a slight oversupply.

(Price of related goods) substitutes - there is a risk of private housing increasing, which will result in consumers moving over to HDB flats.

In order to prevent overwhelming demand for HDB flats, there is a need to increase the supply of flats

Price of flats will eventually increase to cover the cost of the newly supplied flats.

If the price of private housing increases, the demand for private housing will decrease and put more pressure on the demand of housing flats.

not ideal as it creates unwanted pressure on the market.

(Expectations of producers)

- as there will be an expected decrease in price in 2018, producers are more likely to supply more flats in 2017

- Supply will increase in 2017 but will decrease in 2018.

Quantity Supplied for BTO flats

grants such as CPF housing grants and Parenthood Provisional Housing Scheme will help to lower the total price of bto flats

quantity supplied decreases which explains leftward movement of the supply curve.

producers are less willing to supply greater amounts of flats at a lower price because flats have become slightly less profitable to produce compared to the previous years

Supply for BTO flats (Yvonne and Van)

"From June next year, flats will also be launched in Sembawang, Yishun and Sengkang, with a shorter wait time of 2½ years, compared with the typical three to four years."

Technology: Improvement in technology/ technological advance > fewer resources are needed for production of a good > Lower costs of production hence goods can be produced efficiently

" buyers might not see Tengah's appeal now, but with its location near the upcoming Jurong Innovation District and its car-free town centre, it is expected to grow in popularity."

- Expectations of producers: Due to the new area being a car-free town centre, Producers expect Tengah town to gain popularity, they would produce more BTO flats around that area. Supply of BTO flats increases, the supply curve will shift to the right due to expectations of producers.
Price to increase in future so people would buy more now.

Supply for HDB Resale Flats (Lixian and QL)

Determinant: Number of Sellers

There is an increase in the supply of HDB resale flats as there is greater number of HDB owners selling their properties in pursuit of upgrading to private property this year

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Price elasticity:

Buyers are very responsive to the change in HDB price, thus demand for HDB is more price elastic (Proportion of Income spent on a good)

When housing is cheap, households expand (fewer people per household) eg. married couples are more willing to move out and buy their own house.

When housing is costly, households shrink (more people per household) eg. staying with parents for a longer period of time, in anticipation that prices may drop lower.

HDB houses in general is an inferior good:

Income elasticity: This is because when income increases, demand for HDB houses (inferior goods) will decrease as consumer will go for private or landed property instead (Normal goods)

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[Monopolistic - Resale flats]

• Many sellers(flats owner) offering HDB flats and many buyers.

• Product differentiation of HDB resale flats

- Location of HDB estates

- Physical difference (design of flats,etc.)

- Minimal market power (the price of flats is still being controlled by HDB)

[Monopoly - HDB]

Sole seller of housing with no close substitute

Barriers to enter - restrictions on the entry of new firms into an industry

Legal restrictions (License)

Public housing managed by Housing development board

Substantial market power (control the price it sells at/output produced)

Price maker

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Housing market is good to analyse, but please please beware that it is not industry free of government intervention, and as such it will not always behave as a free market.
Also be careful about DD/SS analysis - somewhere I read you were comparing change in price and demand - which is incorrect.

You have plenty on DD/SS now so do pay attention to the other topics covered - resources, scarcity, ED/EY - you only mentioned it very briefly, and Market Structure - also very briefly, but yes, resale flats are Monopolistic competition. HDB overall, as new, could be considered a monopoly. it really depends on the angle of your analysis.