October BTO Applications “Underwhelming” at 1.4 Due to Stricter Non-Selection Penalties

The October Build-to-Order (BTO) exercise saw 9,848 applicants for 6,800 units by 5 p.m. on October 10, yielding an overall application rate of 1.4, as reported by The Business Times. With six projects across Chua Chu Kang, Kallang-Whampoa, Queenstown, and Tengah, the exercise marks the lowest BTO application rate in recent years.

Property analysts describe the 1.4 application rate as “underwhelming.” According to Ismail Gafoor, CEO of PropNex Realty, the last time rates dropped below two was in November 2017, with 1.7 applications per unit. In contrast, application rates from February 2021 to May 2023 ranged between 2.5 to 8.1, showing stronger demand.

Analysts attribute the decrease to stricter penalties introduced by the Housing and Development Board (HDB) and the Ministry of National Development, aimed at reducing BTO flat rejections. First-time applicants who fail to select a flat now receive a non-selection count and are treated as second-timers for one year. Second-time buyers with a non-selection count must wait a year before reapplying. Previously, two counts were permitted before penalties applied.

Ismail Gafoor explained that the stricter policy may deter applicants uncertain about committing, particularly younger couples or those still exploring other housing options. Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, noted that this change may also reduce applications from those unready for immediate purchase.

The policy may also impact applicants’ strategies, as Eugene Lim of ERA Singapore observed, requiring more discerning choices as individuals can no longer apply to multiple exercises without risking penalties. Some potential applicants may be waiting for the December BTO launch, which includes popular locations such as Bishan (Sin Ming) and Bukit Merah (Alexandra), according to Lee Sze Teck, Huttons Asia’s senior director of data analytics.