HDB rents still well on the rise

Source : Sunday Times - 3 Aug 2008

Demand still there with expats on smaller housing allowances and those priced out of condo market

Rents at many condominiums in Singapore appear to be peaking, but landlords of Housing Board flats are still riding the cash wave.
HDB rents continued their steady rise in the second quarter of this year, increasing across all flat types and most towns as renters sought cheaper alternatives to increasingly costly condos.

Priced out

‘Those who used to be renting a condo at $2,000 to $2,500 a month find they have very few options when they want to renew their lease, because their landlords have increased rents to $3,000 to $3,500.’

MR CHRIS KOH, director of real estate agency Dennis Wee Properties, on rising demand for HDB flats

Owners of four-room flats benefited the most, with average monthly rents climbing almost 10 per cent to $1,750, from $1,600 in the previous three months, according to the latest data from HDB.

In terms of towns, Bukit Batok, Central, Serangoon and Hougang saw major rent rises across all flat types.

Generally, HDB rents have been increasing because rents of private apartments ‘have hit a level too high for many to afford’, said Mr Chris Koh, director of real estate agency Dennis Wee Properties.

‘Those who used to be renting a condo at $2,000 to $2,500 a month find they have very few options when they want to renew their lease because their landlords have increased rents to $3,000 to $3,500.’

Many of these displaced tenants work for smaller firms and do not have the flexibility of higher rent budgets, so they turn to HDB flats, Mr Koh said.

Some new tenants are also S-pass holders with smaller budgets that can only fit HDB flats rather than condos, added Dr Tan Tee Khoon, head of KF Property Network, a subsidiary of Knight Frank.

He also noted that the stock of HDB flats for rent remains fairly constant, unlike that of condos. Supply of HDB flats is also limited because of the conditions imposed on owners who want to lease out their flats.

Rising across the board

Between April and June, eight out of every 10 towns saw higher rents for four-room flats, with Jurong East experiencing jumps of up to 21 per cent.

The priciest place to rent a four-room flat is now Bukit Merah, where the average monthly rent is $2,300. Close behind are flats in the Central area, Toa Payoh and Bishan, which command $2,000 or more.

‘Bukit Merah has become popular with foreign nurses who work at Singapore General Hospital, and Jurong East is getting a lot of foreign students from Nanyang Technological University and foreign factory workers working in the west,’ explained Mr Koh.

He added that Toa Payoh seems to attract expatriates working in the city as well as foreign nurses from Thomson Medical Centre and Mt Alvernia Hospital.

Landlords of other types of HDB flats are also seeing a tidy profit. Monthly rents of three-room and five-room flats went up by $100 on average to $1,500 and $1,900 respectively.

For three-room flats, the biggest growth was in Hougang, where rents soared 40 per cent to $1,400 a month. They also saw sizeable increases of more than 10 per cent in Geylang, Bukit Batok, Ang Mo Kio, Serangoon and the Central area.

For five-room flats, Bukit Timah, Jurong West and Hougang were especially in demand. But the most expensive five-room flats are still in Marine Parade and Central, where they go for $2,550 and $2,400 a month, respectively.

Steady in the short term

Rentals for HDB flats are likely to hold steady or even rise for the rest of the year as they remain much more affordable than condos, predicted Mr Koh.

KF’s Dr Tan also believes HDB rents will rise a further 10 to 15 per cent in the next six months.

‘As more new condos are completed next year and the year after, rents of condos will ease and then only will we see HDB rents easing off as tenants will have more choices,’ Mr Koh said.