Thoughts on Latest BTO Ballotting Result: Singapore has a Severe Housing Problem for Genuine Flat Seekers

The ballotting for the latest BTO exercise and under new housing policy guidelines is almost ending. One prominent measure is the large clawback amount to deter HDB flippers for good BTO estates. For context, the clawback amount is based on the price of the flat sold which greatly hurts any profit motive of flat flippers. Below is an excrept:

"If a buyer purchases a four-room Prime flat at S$650,000 and resells it for S$1.2 million in the future, the 9 per cent subsidy clawback comes up to S$108,000, which is equivalent to gross gains of more than S$400,000"

The link to the BTO application rate can be viewed here. Hence what we are seeing from the application are demand from genuine home buyers. And for the standard sites, those pesky flat flippers who seek to profit from BTO lottery (after all for prime/plus flats, there are 6-9% clawbacks on the selling price and a long minimum occupation period which reduces their IRR returns)

Multiple Sites Across Singapore

As said 9 sites across Singapore to meet aspiring flat owners was put out in this mega exercise. This meant almost all who needed a flat genuinely could ballot because there are sites everywhere

HDB BTO Demand is a Lot

Based on current ratio, it shows Singapore has a severe housing problem. As recap, BTO is open to only the low and middle income Singaporeans. Let's look at it segment by segment. 

Singles Segment

In a nutshell, there are too many low/middle income singles desperately in need of a house in Singapore. Even in the hugely unpopular Taman Jurong estate, there is a sufficient amount of desperate singles such that the 2 room flats allocated to singles is oversubscribed that it can fill up other undersubscribed segments such as senior citizens.

All the pent up demand goes to show how much neglect the PAP government has given to the singles of Singapore, close to treating them as second class citizens in the country. 

First Timer Couples Segment

Ovsersubscription has happened as well with the median application rate for 4 and 5 rooms exceeding 1.5 ratio. It goes to show as well as the number of genuine low/middle income seeking for a home has outstripped the supply in this mega BTO exercise.

Thoughts

The government can give multiple reasons but under the new policy, flat flippers has been severely deterred and those who are ballotting for this exercise are genuine individuals who need a flat. The ballotted ratio is staggering especially in the singles group.

This shows the failure of the government to provide homes for its own citizens. The current problem has helped many developers chanced upon selling expensive housing units to desperate citizens of this country. The market for aspiring home owners in Singapore is utterly dire. 

My view is that either a large amount of housing units has to be put forth in the next 6 months to a year to solve Singapore's housing crisis. Alternatively another approach is to review the population policy. One contributing factor to the HDB demand is that the foreigner population has grown tremendously. Foreigners are only able to rent and their large number are eating up all the excess housing units going into the market; in turn contributing to the booming rental market and allowing flat flippers to profit by marketting HDB flats as rental dividend machines.

One solution is to restrict the foreigner population growth to only about 0.5% -1% similar to the citizenry growth. It will help Singapore citizens a lot but the trade off is that the wealthy of the country will see a slower growth of wealth via real estate.