BTO Flats for Couples Undersubscribed, Sign of Home Prices to Fall

As of 9 October, 11am, the results stand that HDB BTO application for couples is undersubscribed. Only 0.8 times of the available supply has been applied for and as it stands most will get a flat (only the 5 room flats are over subscribed). My sense is that when applications close on 10 October 2359hrs, it should be just about 1 time only

Why?

First this is due to a change in HDB application rules where less genuine buyers, such as those who queue with the whimsical hope to obtain the choicest flats to flip BTO for reason of profits and will reject other flats that are in the best location of the building, will be penalised. 

The current cycle of flat applicants are individuals who genuinely need a HDB flat, along with a proportion who are still obtaining a BTO flat to flip for profits 5 years after receiving the keys. However, the number of individuals in this group is now less than the supply avaliable, as evident by the application rate.

BTO Flat Applicants To Benefit

Given this unique scenario, there could be a prospect of HDB reducing BTO flat prices from the next cycle so as reward Singaporeans who are willing to wait for a flat and to match the flat supplies. 

Personally, I hope HDB will reduce BTO prices by about 10% to incentivise Singaporeans who can wait for a flat and to manage the high housing cost Singaporeans suffer from. Hence, I expect (and wish) BTO prices can be reduced to help Singaporeans given the scenario where BTO flats are now reaching an over supplied state.

HDB Resale Prices Will Fall

Given the laclustre demand for BTOs and with HDB likely to maintain its flat supply for the next few quarterly cycles, this will lead to a second order of effect in decrease of demand for resale HDB because individuals know they can get a BTO flat easily. 

Hence HDB resale prices will start to fall. It may be a good time for individuals to start offloading HDB resale flats they do not need because we should be at the current cycle peak for HDB flat prices, a downcycle of HDB prices should happen for the next few years. For those who can still wait and want a resale, do wait for a year where prices should be lower than where we are at now (despite inflation).