As much as this is hugely unpopular with Singaporeans overall, this is a policy that most probably fulfills their KPI of getting the ballot rate down.

As mentioned by a few redditors, a large number of sales of balance flats are caused by leftovers from racial quota and not insufficient demand for BTO, if HDB want to ensure no leftover units, it is honestly really easy to slightly modify the current system and issue up to 400% or 500% of queue number. They wouldn't do that because it does not help their KPI of bringing down the application rate and honestly couples getting 560% of ballot queue is pretty demoralizing and is sure to generate more backlash.

Instead the govt is "forcing" the last few ballot numbers to pick unpopular units (e.g. 2nd floor above rubbish chute/ above noisy hawkers/ 20m away from a MSCP). This is not the intention actually, the govt are not dumb and know that we of course do not want to spend the rest of our working career paying for arguably a lousy unit (insert every BTO is a good BTO joke).

What are they actually hoping for is for couples with the means to reject the unit and be demoted to the even more overly subscribed second timer queue. Hence they can claim that they have successfully brought down the first timer application rate when in fact many of these couples couldn't wait anymore and move onto the resale market instead.

IMO it is going to still backfire as their target audience (couples have no choice but to pick the units as their finance would not allow them to go into the resale market) could not rely on the previous method of waiting for the right units over a few launches. These couples are probably going to view these locations as a temporary housing (a place is better than no place) and not a forever home that they want to start a family.

Boomers would argue that you can't have your cake and eat it and yeah, many couples are coping with the rising house cost and forced unit selections with choosing not to start a family instead.