ST : Rents for HDB flats on the rise

31 Jan 2011,
Rents for HDB flats on the rise

But number of subletting deals has fallen amid recent property cooling measures
By Daryl Chin

THE decision to buy a four-room public housing flat in Whampoa 10 years ago is now paying off for sales executive Jennifer Tan. The 35-year-old lived in it for three years and started renting it out in 2004, making $1,000 a month from it.

Today, her rental income is $2,300.

She and her husband, who live with her parents, said: 'The rental market is getting stronger, so I plan to hold on to the flat for as long as I can.'

The median rental for those who have rented out their flats has been rising steadily in the past year or so, except for a slight dip in the second quarter of 2009. A two-room flat that commanded $1,100 in 2009 will fetch $1,300 now; a five-room unit, which could be rented out at $1,800 back then, will earn $2,150 now.

But despite this, the number of subletting transactions among public housing units has fallen, latest figures from the Housing Board show.

At the end of last year, there were 5,868, a 22 per cent fall from 7,540 in the third quarter.

Analysts and industry players The Straits Times spoke to said rentals are likely to head north as the economy grows and more workers come here to take up jobs. And with high property prices now, people will choose to rent instead of buy.

However, these factors have come up against the recent cooling measures: The Government has announced it will ramp up the supply of new flats from 17,700 last year to 22,000 this year.

PropNex spokesman Adam Tan said: 'With an increased supply and a faster completion time for build-to-order flats, there is less of a push for home owners to rent a flat if they can wait it out.'

ERA key executive officer Eugene Lim said that in any case, rentals for HDB flats will not go past $3,000, because at that price, one can rent a private property.

Mr Colin Tan, research and consultancy director of Chesterton Suntec International, said: 'Demand could also be coming from home owners who have sold their homes and are renting HDB flats, while waiting for prices to fall in a market correction.'

Among those who rent their homes and are being hit by rising rentals, some are examining their options. Mr Melvin Seow, 32, who pays $2,000 a month to rent a four-room flat in Punggol, said: 'If rental prices are going to increase and I cannot get a flat soon, I may move back with my parents.'

darylc@sph.com.sg