Has BTO Lost Its Shine Amidst Construction Delay From COVID-19? - Mortgage Master Blog

Has BTO Lost Its Shine Amidst Construction Delay From COVID-19?


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by Si Jie Lim on


In Singapore, the common wisdom for homeowners is to start with an HDB BTO for your first home. Once your BTO meets its 5-year minimum occupation period (MOP), you can then make your next property move: either upgrade to a condo or move to a bigger/more central HDB unit on the resale market. Well, it kind of made sense, until COVID-19 hit.

BTO vs Resale: Is BTO Still The Go-To Choice in 2021?

The BTO vs resale debate has been ongoing ever since the existence of the HDB resale market. Over the years, the advantage that BTO has over resale flats has been slowly eroding away. And we think that the impact of COVID-19 has finally tilted the scale in resale flats favour over BTO. Here’s why.

1. Waiting Time – Can You Afford To Wait That Long?

Over the years, HDB has been doing its best to shorten the building time for BTO flats to 3 - 4 years. In 2018, some BTO flats were built in 2.5 years since application of the BTO. And kudos to HDB for reducing the building time for homebuyers like you and I.

Unfortunately, when COVID hit us, the construction sector took a big hit as well. Safety management measures had to be put in place to ensure that COVID doesn’t spread in the community. This meant that construction of BTOs will require 1-2 years longer than the time it took in the past, i.e. 4-5 years on average. For instance, the upcoming Woodlands BTO exercise in August 2021 will only be completed in Q2 2026, which is about 5 years from the point of application.

For homebuyers who are unable to wait that long, resale flats present a much more viable option.

Score: Resale: 1 | BTO: 0

2. Uncertainty On Amenities – You Don’t Know What You Might Be Getting Next To Your Home

Resale flats are typically located in mature estates where the estate is already well developed. This means that amenities like shopping malls, eateries, MRT stations and schools have all been established. So, when you purchase a resale flat, you know exactly the kind of neighbourhood you are moving into.

But for BTOs, there is much more uncertainty on the kind of amenities that you will get to enjoy in your new home. This is especially so for those who choose to live in non-mature and newly built towns like Tengah. Even with the URA Master Plan, you can't predict with any certainty what kind of tenant mix the mall would have or whether you will have a market near your home.

Just ask those who applied for their homes in Punggol and Sengkang back in the early 2000s. When they first moved into their homes near the end of the decade, they only had a high level view of where the flats, potential malls and MRT will be. The former Compass Point (now known as Compass One) and the much smaller Punggol Plaza were the only malls servicing the new towns. Waterway Point didn't open until 2016! This was long after several BTO launches in Punggol had already been completed.

Score: Resale: 2 | BTO: 0

3. No Viewing Opportunity Before Making The Purchase

Wind, sun and layout. These are some important factors to consider when you purchase your home. In general, you'd want to avoid a west-facing unit (because of the setting sun!) with no chance of wind, and you definitely want to be aware of any potentially weird unit layouts.

Fortunately, modern BTO unit layouts tend to be pretty cookie-cutter. This is to maximise the value of HDB's prefabrication innovations. However, it's a little harder to gauge the weather's impact on a unit when it only exists on paper.

For resale flats, you can choose to make multiple visits to the unit before you make your decision. This allows you to physically gauge how the unit fares on a windy day and with the setting sun. You can also get an idea of what the view from your unit is like - whether you get to enjoy the natural beauty of nearby parks, or the natural

With BTOs, you don’t get the luxury of doing that. All you can do is to look at the site plan and try to make an informed guess. Even then, your guess might be way off, especially when it comes to how windy the unit gets. You will only truly know whether you chose right or wrong once you move into your BTO.

Score: Resale: 3 | BTO: 0

4. Dependent On Luck – You Don’t Have Full Autonomy Over Your Choice

Everyone knows that high floors are more desirable when you want to sell when you finish your MOP. We also know that some stacks that are nearer to the MRT or malls are more in demand. They not only bring more convenience for you, but they can potentially fetch a higher price when you decide to sell. However, all these are dependent on luck, i.e. whether you get a good ballot number to choose the right stack and floor. If you get a ballot number that is way behind, you might end up getting units on the 2nd floor on stacks that might be far away from the amenities. Thus, luck plays a very huge role when it comes to buying a BTO, unlike resale flats where you have the autonomy to choose the unit that you like.

Score: Resale: 4 | BTO: 0

5. Affordability

One of the key reasons why BTO is still the default choice for many Singaporeans is its affordability. Because of the “pre-order” system for BTOs, they are priced at a much more affordable range.

And they used to be even more affordable, until the government decided that BTO prices will be pegged to market price because of million dollar resale flats like Pinnacle @ Duxton. That said, even at its current market-pegged prices, BTOs are still (at least) $100k-$200k cheaper than the resale market. But nowadays, the government has been trying to shift the demand for BTO to resale flats with the Family Grant (up to $50k) and Proximity Housing Grant (up to $30k). This will offset a significant amount of the price difference between BTOs and resale flats for homebuyers. Plus, you won’t have to wait as long as BTOs if you opt for resale flats (see point 1).

Score: Resale: 4 | BTO: 1

BTO Still Caters To The Needs Of Some Homebuyers

While we think that resale flats is the better of the two options for homebuyers, we don’t discount the fact that BTOs do still cater to the needs of some homebuyers. For those who are still interested in BTOs, do check out our BTO Guides for this year's BTO projects.

Preparing Your Next Steps For A Resale Flat

For those who are considering the resale route, the next step will be to consider how to lower your cost of ownership. Make sure to check out the grants that you are entitled to so that you can better budget for your next home. Speaking of budget, you should also consider how you can lower the cost of home ownership by obtaining the best home loan rates for your home loan.

If you need someone to assist you in getting the best home loan rates, Mortgage Master is here to provide an honest and transparent service as your home buying ally. Fill up our enquiry form and we will follow up with you within 1 working day.

Posted in New Purchase on Apr 19, 2021.