Policy changes on ROF, unwed parents won't have a huge impact on HDB resale prices: analysts

Victor KangMarch 9, 2020

HDB flats in Ghim Moh

Analysts don’t expect the policy changes to significantly affect the HDB resale market due to the limited number of unwed parents in Singapore as well as the unfavourable HDB flats available for selection. 

Analysts expect the government’s decision to scrap the Re-Offer of Balance Flats (ROF) exercise as well as allow more unwed parents to purchase public housing flats to have minimal impact on resale Housing and Development Board (HDB) flats’ prices, reported Today Online.

This comes as Singapore has a relatively small number of unwed parents while unsold HDB units are mostly unpopular among buyers.

During the debate on the Ministry of National Development’s (MND) budget, National Development Minister Lawrence Wong announced that the ROF exercise will be discontinued, which means unselected HDB flats at the Sale of Balance Flats (SBF) exercises will be directly offered for booking by the public.

Related: What Do You Need to Know About HDB’s ROF Scheme

While the ROF’s removal will enable prospective house buyers to acquire their flats faster, it was not the government’s intention to create another type of demand, noted Christine Sun, Head of Research and Consultancy at OrangeTee.

“It’s not as if because of this policy change, people will rush to buy,” she said.

That’s because the units are likely not “choice units”, explained Nicholas Mak, Head of Research and Consultancy at ERA, adding that the units are typically located on the second-floor units, “or the orientation is not attractive, or it faces the afternoon sun or the multi-storey car park”.

According to him, the policy’s intention is to sell off Build-to-Order (BTO) flats that have been unsold for the past few years.

“HDB flats’ lease is for 99 years. They probably do not want to keep it vacant for too long,” said Mak.

Meanwhile, analysts lauded MND’s move to allow unwed parents aged 21 and above to purchase a new two-room or three-room flats within non-mature estates as it would be helpful for those who have fallen through the cracks.

However, they do not expect the policy change to significantly affect the HDB resale market due to the limited number of unwed parents in Singapore.

Read: Singaporeans are optimistic with the current real estate market: PropertyGuru Study

Only those aged 35 and above were previously allowed to purchase a resale flat as a single person.

“We have to see how many unwed parents from disadvantaged backgrounds previously had to turn to resale, but now they can find BTO flats they want. That might make a slight decrease in demand in the resale market. But I don’t think it’s highly significant,” said Mak.

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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg

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