There were 1,700 cancellations in 2020 as compared to the 1,450 appeals between 2018 and 2019.
The Housing and Development Board (HDB) said about 1,700 home buyers cancelled their Build-To-Order (BTO) flat bookings last year, reported Channel News Asia (CNA)
This is lower as compared to the annual average of 2,500 cancellations registered in 2018 and 2019, or 2,300 annual cancellations between 2010 and 2019.
HDB noted that the main reasons cited by homebuyers for cancellations included “a break-up of their fiance-fiancee relationship, a change in housing plans, or a change in financial circumstances which affected the flat purchase”.
Of the 1,700 cancellations in 2020, about 1,300 appealed for a waiver of cancellation penalties, down from the yearly average of 1,450 appeals between 2018 and 2019.
Buyers who opt to cancel their BTO bookings typically either forfeit their option fee or 5% of the flat acquisition price. The buyers also face a one-year wait-out period before they can again apply for subsidised housing.
HDB said these measures were put in place to ensure buyers are serious about their acquisition.
Acknowledging that the pandemic-induced construction delay may have “caused inconvenience and disrupted the life plans of flat buyers”, the Housing Board said it would consider waiving the cancellation penalties earlier this year.
“For flat buyers who need to cancel their BTO flat booking to buy a resale flat due to urgent housing needs, we will consider waiving the cancellation forfeitures, taking into consideration their individual circumstances,” it said as quoted by CNA.
In fact, about one-third of the appeals for waivers were granted each year, shared HDB.
Noting that no information was provided by HDB on when the cancelled flats were initially booked, Lee Sze Teck, Senior Director of Research at Huttons Asia, said there could have been fewer cancellations in 2020 as those affected by construction delays may have booked their BTO flats way back in 2016.
“These BTO projects in 2016 and 2017 are likely to be in advanced stages of construction and most contractors tend to deliver earlier than the stipulated delivery date. Hence these groups of buyers are affected to a lesser extent,” he said as quoted by CNA.
Moreover, the BTO flat supply was tapered by HDB in 2018 and 2019, which may have also contributed to the fewer cancellations seen last year.
PropNex CEO Ismail Gafoor said many home buyers may have opted to keep their BTO bookings in 2020 due to various pandemic-related factors.
“The BTO applicants who were thinking about switching over to HDB resale flats found it tough to do so owing to (viewing restrictions amid) the pandemic situation, as well as rising resale prices and increasing cash over valuation trend,” said Ismail as quoted by CNA.
And while the number of cancellations was lower in 2020, the proportion of buyers who appealed for a waiver of cancellation forfeiture increased to 76.5% in 2020 from 58% in 2018 and 2019, he said.
“We are of the opinion that the delay in constructions of BTO flats and loss of jobs for some people during the pandemic could be the underlying reasons for the cancellations, hence the higher proportion of appeals,” added Ismail.
Meanwhile, views on whether these cancellations will have a significant impact on the resale market were mixed.
Huttons Asia CEO Mark Yip pointed that “in normal circumstances”, the figure may not have an impact on the resale market, considering that they only accounted for a small percentage of the total transaction volume for the entire year.
“However, during this period where the construction delay-induced shift in demand is high, every single buyer who switches to the resale market adds to the competition,” he said as quoted by CNA.
“The HDB resale volume in 2021 is estimated to be between 27,000 and 29,000 units, the highest yearly transaction level since 2010.”
Ismail, on the other hand, said the “previous years have proven that even with higher volume of cancellations (2,300 to 2,500 per year), it did not hugely impact the resale market”.
For this year, he expects cancellations to be “largely similar” to 2020, given the continued hike in resale prices.
Cheryl Chiew, Digital Content Specialist at PropertyGuru, edited this story. To contact her about this story, email: [email protected].