Why Bto Supply Not Curbs Key Cooling Hdb Resale Prices
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Rewritten:
Despite numerous government efforts to control demand, the prices of HDB resale flats have risen by over 50% since reaching a low point in the second quarter of 2019. This significant increase reveals a deeper issue: demand-side interventions have limited effectiveness when the supply does not meet the growing housing needs.
Demand restrictions only have a temporary impact
Since 2021, the government has implemented measures to control demand, such as tightening the loan-to-value (LTV) ratio for HDB loans on three occasions: December 2021, September 2022, and August 2024. In addition, in September 2022, the medium-term interest rate used to calculate the mortgage servicing ratio (MSR) was raised by 0.5 percentage points. Private property owners (PPOs) and former private property owners were also required to wait for 15 months before purchasing a resale flat.
While these measures may have temporarily slowed down purchases, they did not deter genuine demand, especially since resale flats fulfill a crucial housing need. Once eligible, buyers returned to the market and prices continued to rise.
Supply-side measures have a more lasting impact
On the supply side, the government typically responds by increasing the launch of Build-To-Order (BTO) and Sale of Balance Flats (SBF). These flats, directly offered by HDB, are more affordable than resale flats and help to meet the growing demand.
History has shown this to be effective. In FY2011 (April 1, 2010 to March 31, 2011), HDB recorded a record 30,602 new flat bookings (BTO and SBF), which coincided with a slowdown in resale price growth from 12.8% to 9.6%. This trend continued in FY2012 and FY2013, with flat bookings remaining high at 24,191 and 28,789 units respectively, and eventually leading to a decrease in resale prices by 3.4% in FY2013.
However, from FY2015 to FY2018, the supply of BTO flats was reduced, with sales bookings hovering above 21,000 units annually, down from the annual average of 25,000 between FY2011 and FY2014. This led to a decrease in resale prices in FY2019, as buyers turned to the resale market due to the limited BTO supply.
The pandemic and its effect on housing supply
The outbreak of Covid-19 was an unforeseen event that disrupted the housing market. Construction delays, work-from-home arrangements, and supply chain disruptions accelerated the demand for housing. As a result, resale prices increased by 8.1% in FY2020 and 12.2% in FY2021, amounting to a cumulative increase of over 20%, despite efforts to increase BTO supply.
Recognizing this, HDB ramped up its new launches in FY2022 (25,574 bookings) and FY2023 (24,020 bookings). This led to a decrease in resale volumes and a slowdown in price growth to 8.8% and 5.8% respectively, from the high of 12.2% in FY2021. This indicates that higher BTO booking volumes, particularly above 21,000 units annually, have a moderating effect on the resale market.
Note: The figures for BTO, DBSS, SBF, and other flats sold by HDB are based on its Annual Reports. The report for FY2024/2025 is not available as of July 22, 2025. Source: HDB Annual Reports, HDB, Huttons Data Analytics.
SBF: Not a cure-all solution
It is commonly believed that SBF units, which are often completed or near completion, have a more immediate impact on resale prices. However, there is no clear correlation between the two.
Between FY2011 and FY2023, an increase in SBF bookings did not consistently coincide with a decline in resale volumes, except for in FY2011 and FY2013. This could be due to buyers being deterred by limited availability of flats in certain towns, lower ballot success rates, and restrictions under the Ethnic Integration Policy (EIP). As a result, the influence of SBF bookings on resale demand and prices is weaker compared to that of BTO flats.
Note: The figures for BTO, DBSS, SBF, and other flats sold by HDB are based on its Annual Reports. The report for FY2024/2025 is not available as of July 22, 2025. Source: HDB Annual Reports, HDB, Huttons Data Analytics.
Stronger link between BTO bookings and resale prices
The relationship between BTO bookings and resale prices is more significant. From FY2011 to FY2013, a high volume of BTO bookings led to a moderation in price growth, while a dip in bookings below 21,000 units from FY2014 to FY2021 caused an increase in resale prices.
In FY2022 (22,192 bookings) and FY2023 (20,094 bookings), when BTO launches increased, price growth eased to 8.8% and 5.8% respectively. However, the BTO bookings in FY2023 were below the 21,000-unit threshold, which may have contributed to the price moderation due to the 15-month wait-out period for ex-PPOs.
The evidence points to a need for consistent BTO booking volumes of over 21,000 units annually to control the growth of resale prices. This translates to a launch volume of 23,000 to 25,000 flats per year, a target that HDB has not consistently met in recent years.
What about newly MOP flats?
Another factor to consider is the release of flats that have just met their Minimum Occupation Period (MOP). These newer and desirable flats often fetch a higher price and can drive up the overall resale prices. However, the correlation between newly MOP flats and resale prices is weak (33%) in the same year, but strengthens significantly to 86.2% with a delay of one to two years. This suggests that most flat owners do not sell immediately after the MOP, but the market feels the full impact when they do, typically one to two years later.
Key takeaways
Supply matters more than demand restrictions: Demand-side policies, such as LTV tightening or wait-out periods, only have a short-term effect. Sustained control of prices requires a consistent supply of BTO flats.
BTO is more influential than SBF: While SBF flats are quicker to occupy, BTO bookings have a more consistent influence on resale price movements.
The importance of a 21,000-unit threshold: The historical data demonstrates that booking volumes above this figure are necessary to moderate price growth. To achieve this, HDB may need to launch between 23,000 and 25,000 BTO flats annually.
Keep an eye on the MOP pipeline: An increase in MOP-flat supply may inflate resale prices one to two years later, which policymakers must consider when managing the market.
A delicate balancing act
Ultimately, HDB faces a complex challenge: maintaining public housing affordability while also stimulating demand for executive condominiums and private housing. Oversupply in the BTO segment may temporarily control resale prices, but could lead to an increase in prices when these flats become available after fulfilling the MOP. However, a long-term solution to ensure affordability and a stable resale market is clear: Build more and do so consistently. The data shows that supply, not restrictions, is the more effective lever.
Lee Sze Teck is the senior director of data analytics at Huttons Asia.