Not an expert on this but in my limited understanding I see a combination of factors at play.
The price of BTOs is rising. This is made more acute by a continual limitation in the supply of flats. Every year the BTO exercises the demand outstrips supply like crazy - number of applicants per flat is usually more than 5-7x (depending on precinct).
Despite this, there is still high demand. Why? The draw of a new, subsidised flat will always be that it's cheaper than resale. A lot of people buy new flats becasue they're hoping to sell after MOP and make some capital gains before upgrading. This phenomenon also leads to rising resale prices cause everyone trying to sell higher after MOP.
But for resale flats, declining lease means declining prices. The fact is at 99 years of lease, the flat value goes to zero. This will not change regardless of how high the resale prices go up. So that only accentuates the decline in value. Imagine if a 10 year old flat used to cost 400k - the decline in value will not be as marked as a 10 year old flat that costs 700k.
Put it together and you have a kind of peaked curve, with the price of a new flat going up till it hits a peak (maybe 10-20 years into the lease), before declining to zero after 99 years. And I think you're quite in saying that the BTO and its rising prices are pushing this peak higher, and making the resultant decline on the right side of the curve steeper. To add on, I think the demand-supply of flats plays a part too.
Just my thoughts, but again, I'm hardly an expert on this. Useful for us as Singaporeans to be thinking about these issues though.
Not an expert on this but in my limited understanding I see a combination of factors at play.
The price of BTOs is rising. This is made more acute by a continual limitation in the supply of flats. Every year the BTO exercises the demand outstrips supply like crazy - number of applicants per flat is usually more than 5-7x (depending on precinct).
Despite this, there is still high demand. Why? The draw of a new, subsidised flat will always be that it's cheaper than resale. A lot of people buy new flats becasue they're hoping to sell after MOP and make some capital gains before upgrading. This phenomenon also leads to rising resale prices cause everyone trying to sell higher after MOP.
But for resale flats, declining lease means declining prices. The fact is at 99 years of lease, the flat value goes to zero. This will not change regardless of how high the resale prices go up. So that only accentuates the decline in value. Imagine if a 10 year old flat used to cost 400k - the decline in value will not be as marked as a 10 year old flat that costs 700k.
Put it together and you have a kind of peaked curve, with the price of a new flat going up till it hits a peak (maybe 10-20 years into the lease), before declining to zero after 99 years. And I think you're quite in saying that the BTO and its rising prices are pushing this peak higher, and making the resultant decline on the right side of the curve steeper. To add on, I think the demand-supply of flats plays a part too.
Just my thoughts, but again, I'm hardly an expert on this. Useful for us as Singaporeans to be thinking about these issues though.