HDB, condo rents up again

Number of leases also up for second month, spurred in part by restrictions on OTP extension

The HDB rental volume rose 13.9 per cent month on month to an estimated 1,734 units last month. For condominiums, the spike was 6.3 per cent, with an estimated 4,409 units rented out
The HDB rental volume rose 13.9 per cent month on month to an estimated 1,734 units last month. For condominiums, the spike was 6.3 per cent, with an estimated 4,409 units rented out.ST PHOTO: LIM YAOHUI

Rents and the volume of leases for both Housing Board flats and condominium units rose last month for the second month running, according to flash data from real estate portal SRX Property that was released yesterday.

The HDB rental volume rose 13.9 per cent month on month to an estimated 1,734 units last month, from 1,523 the month before.

The rental volume for condominiums climbed by 6.3 per cent month on month. An estimated 4,409 units found tenants, compared with 4,148 in September.

Ms Christine Sun, head of research and consultancy at OrangeTee & Tie, said the increase in rental volumes could partly be attributed to the restrictions on developers reissuing options to purchase (OTPs) that were announced on Sept 28.

Under the terms of a standard OTP, buyers of new private homes have three weeks to book their right to purchase a property from a developer in return for a cash down payment, which is up to 5 per cent of the price of the unit.

A buyer who does not exercise the right to buy may forfeit 25 per cent of the booking fee.

But some developers had been reissuing OTPs to buyers, giving them more time to line up the funds needed to make the purchase and avoid paying additional buyer's stamp duty (ABSD).

"As most buyers have not been granted an extension of their OTPs, some have sold their homes to avoid paying the ABSD when they purchased a new condominium. They have subsequently rented a unit while they wait for the completion of their new home," Ms Sun said.

HDB rents inched up 0.7 per cent from September, and 0.8 per cent year on year. They are still down 13.7 per cent from their peak in August 2013.

Condo rents edged up 0.3 per cent from September, and by the same rate year on year. They are 16.8 per cent lower than their peak in January 2013.

Year on year, the rental volume for HDB flats is still down by 12.1 per cent, and 8.9 per cent lower than a five-year average volume for the month.

As for condos, the total number of leases is 4.1 per cent lower than in October last year, but 5.8 per cent higher than a five-year average volume for the month.

Ms Sun noted there is still considerable uncertainty in the economy and the employment outlook remains weak for many sectors.

"The global economic weakness may necessitate more job cuts," she said, adding that a further reduction in foreign employment will hurt the leasing market.

"Therefore, the rental volume may be slightly lower in 2021, dipping about 5 per cent year on year. Rents may dip around 2 to 4 per cent next year."

A version of this article appeared in the print edition of The Straits Times on November 12, 2020, with the headline 'HDB, condo rents up again'. Subscribe