As you may know, property value is all about location, location, location. No matter what housing type you have, properties in more popular locations generally command higher prices; this is seen in mature vs non-mature estates, or homes in the Core Central Region of Singapore.
Of course, this would also mean a pretty modest profit, if you’re lucky enough to snag a home and eventually sell it in one of these locations! With three upcoming BTO projects already classified under the HDB’s new Prime Location Public Housing (PLH) Model and a few others expected to be similarly classed in the future, the somewhat new-ish model marks a significant shift in Singapore’s property market.
To help you understand what the new scheme is all about, and how it will affect you, here’s our guide on what PLH projects are, and how they differ from the usual BTOs.
What is the Prime Location Public Housing (PLH) Model?
Not too long ago in October 2021, HDB announced that it was introducing the Prime Location Public Housing (PLH) Model as a means to keep public housing – meaning BTO flats – in prime locations affordable, accessible and inclusive for all Singaporeans.
Image credit: HDB
Why the need for this? Well, simply because if the property market was left to its own devices, these prime location projects would skyrocket in price, either at launch or subsequently in the resale market. Only the wealthy would be able to afford these properties then, and this would impact the spirit of diversity that is emphasised in public housing.
As a means of comparison, the upcoming PLH project at Queenstown is priced around $511,000 for a 4-room unit. In contrast, the median price of resale units transacted at Queenstown went for as high as $820,000 according to the HDB’s Public Housing Data for 1Q 2022.
And so, the model really is to allow for more affordable housing options in these extremely popular locations.
In addition, we all know that securing a BTO in a popular, oversubscribed location is akin to striking TOTO or 4D. Given that these prime location projects are guaranteed to appreciate in value, many would be incentivised to apply just for the chance to get a unit, as it would mean earning a good eventual profit.
Key differences between PLH units and BTO units
Longer Minimum Occupation Period (MOP)
Currently, all regular BTO launches have an MOP of 5 years, meaning that you have to live in that unit for 5 years before being able to sell it in the open market. On the other hand, PLH flat owners will have a longer MOP of 10 years, which not only applies to buyers of new launches, but also to subsequent resale buyers.
According to the HDB, this is to “strengthen the owner-occupation intent”; basically, it’s to emphasise the message that public housing should be for those with real housing needs, instead of those who are just buying to flip it at the earliest opportunity for a profit.
Unable to rent out entire PLH unit
Another significant difference between PLH and BTO units is that for the former, owners will not be able to rent out the entire unit, even after MOP. Given that people are allowed to invest in private property after the MOP, this move is to ensure that people won’t simply hold onto the PLH flat forever to collect some pretty decent rental income (since they are in prime locations after all), while living in their other properties.
Image adapted from: HDB
Take note that renting out spare rooms is still allowed, so buyers can be living in the flat and renting out any spare rooms they have.
Subsidies recovery when PLH flat is sold
To keep prices of PLH flats affordable, the government will give out out additional subsidies on top of the existing ones that people usually enjoy when purchasing a regular BTO. So in a way, BTO buyers pay more out of their own pockets, as compared to PLH buyers.
To keep things fair, owners of a PLH flat will have to return a certain percentage of the resale price or valuation (whichever is higher) back to the HDB, upon selling the unit. Interestingly, the quantum is not fixed across the board, and will vary from project to project. For reference, the first ever PLH project in Rochor will have a subsidy clawback of 6%.
All in all, think of these as cooling measures for the property market, to ensure that prices don’t spiral out of hand. For more specific details, you can read up on HDB’s PLH Model.
Recent projects announced to be under the PLH model
Image credit: HDB
The very first HDB project to be launched under the PLH Model is at Rochor, named River Peaks I & II. It comprises about 960 3-room and 4-room units. According to reports, 3-room units at launch were going for around $409,000-$474,000, while 4-room units were going for around $582,000-$688,000.
Right off the bat, one of the main draws of the project is its location. It’s situated right along the city fringe in the vicinity of Jalan Besar, Bukit Timah Road and Rochor Road, as well as being right next to Jalan Besar MRT and with Bugis MRT not too far away. It is a fantastic location, especially for those looking to stay near the city while having the connectivity to travel around.
Image credit: HDB
What’s important to note is that the project was launched in November 2021, and expected to be completed around 2Q 2028. Coupled with its 10-year MOP, this means that this is in essence a 17-year decision, which understandably not many might be comfortable with.
However, after the sales exercise was concluded, HDB reported that there were about 867 applications for the 280 3-room units, implying that people had a one in three chance of securing a unit. The 4-room flats were more popular, with 6,976 applications for 680 available units, translating to a 10x oversubscription rate.
Going by this, it seems that prospective homebuyers were undeterred by the higher price point for PLH flats, or the other measures like the 10-year MOP or subsidy clawback. Rather, the project’s attractive location and potential for significant appreciation in value seems to be a big hit, especially for those who don’t mind putting money down for a decent location to live in while also accruing unrealised profit in the long term.
Image credit: HDB
Just over a week ago, HDB announced 2 more projects to be launched under the PLH Model in Bukit Merah and Queenstown, for the May 2022 BTO sales exercise. In total, there will be about 2,520 3-room and 4-room units across both sites. While prices are slightly lower than that of the Rochor PLH project, it will also have a similar 6% subsidy clawback clause, if buyers choose to eventually sell their flat.
Future projects expected to be under the PLH Model
With 3 projects already announced under the new PLH Model, there’s much anticipation and talk over where the next PLH project will be.
Given that we already know that PLH flats involve developments at prime locations, it would be safe to assume that the future projects like the first ever BTOs at Keppel and new BTOs at the redeveloped Farrer Park vicinity would be launched under the PLH Model. They are properties set to be built on prime land after all, and so would see a higher price ceiling.
In the meantime, you still have until 11.59pm tonight to apply for one of the two PLH projects in Bukit Merah or Queenstown, for the May 2022 BTO sales exercise. Do expect these projects to be well oversubscribed, so fingers crossed you’ll be able to secure a good number!