Application for the February HDB Build-To-Order (BTO) launch closed yesterday with the results released by HDB shortly after. As with all good media, ChannelNewsAsia (CNA) was quick to report the news, deciding to focus on the overwhelming applications made for the Bidadari Alkaff Oasis estate.
The CNA article, which is accompanied with a broadcast on CNA, started in a pretty standard way, stating that 3,020 applied for just 236 units of 5-Room and multi-generation flats.
Singaporeans who are familiar with BTO exercise would know that this means the estate was 12.8 times oversubscribed. However, the CNA article phrase it in an unusual way, choosing to call it as “an application rate of 12.8 per cent”
We recalled what our maths teacher used to taught us when it comes to using percentage. Percentage is usually used when we want to express a number as a fraction of 100. For example, 50% of the students in a class passed their maths exam. This would mean that there were 40 students in the class, of which, 20 of them passed their maths exam.
Using the phrase “an application rate of 12.8 per cent” is very different from saying that the flats were 12.8 times oversubscribed.
Were There More First-Timers Or Second-Timers Applicants?
A poor choice of words is something that happens from time to time. One could argue that people living in Singapore would instantly know that a HDB BTO launch would hardly ever be undersubscribed, let alone to the extent of having just a 12.8 per cent take up rate. The more likely alternative is that the report meant that it was 12.8 times oversubscribed.
Unfortunately, the article continued by saying that “second-timers dominated the numbers – with an application rate of about 91 per cent, compared to first-timers, who had an application rate of 9 per cent”. Again, this is a clear misinterpretation of the figures from CNA.
The immediate thought that comes to mind when you read such a statement would be to assume that 91% of applicants are second-timers who already have an existing home. You may quickly conclude that the 9% of first-timers without a home are a minority among the applicants, and as such, would have a good chance of getting a flat.
This did not seem right to us. BTO launch are usually dominated by first-timer, let alone to such a large extent of 91% from second-timers. We decided to take a look at the HDB BTO application results for ourselves.
Rather than this being a case of 9% of applicants being first-timers and 91% being second-timers, the HDB results is actually saying that the oversubscription rate among first time applicants is 9.0 times, while the oversubscription rate for second-time applicants was 91.1 times.
The reason for such an overwhelmingly high oversubscription rate for second-timers is not simply because there were many applicants. Rather, only about 5% of 3-room to 5-rooms flats in mature estate are allocated to second-timers, with 95% being allocated to first-timers.
Based on our estimation, only 5% of the 236 units (about 12 flats) were meant for second-timers. This translates into about 1,093 second-time applicants. It isn’t a small amount, but by no means were second-time applicants “dominating” the launch. There were still a sizeable number of first-time applicants, enough to create a 9.0 times oversubscription rate.
To make the misinterpretation even worse, the article even continued to quote some experts on the reason for the high number of second-time applicants. These experts were happy to comply in giving their views on why demands among second-time buyers were stronger.
Unfortunately, the actual results showed that with a 9.0X oversubscription rate, 5-Room & Multi-Generation flats at Bidadari were pretty popular with first-time buyers as well.
If you are one of the first-timers who applied for a 5-room flat at Bidadari and thought your chances of securing a flat was high due to most applicants being second-timers, we hate to break the bad news to you. Your chances are still pretty slim with the oversubscription rate at 9.0 times, just not as bad the second-timers.
DollarsAndSense.sg aims to provide interesting, bite-sized and relevant financial articles.
Learn together with like-minded Singaporeans at the Personal Finance Discussion SG Facebook Group by discussing a range of personal finance topics.
If you have not done so, subscribe to our free e-newsletter to receive exclusive content not available anywhere else.