PUBLIC housing rents have hit a 10-year high as sizzling demand for private property rentals spills over to Housing Board flats.

PUBLIC housing rents have hit a 10-year high as sizzling demand for private property rentals spills over to Housing Board flats.
For the first time in recent memory, monthly rents for some HDB flats have pushed northwards of $2,000 in leases signed in the last couple of months.

These flats are located near the city or MRT stations, but rents for flats in less sought-after areas are rising too, say property consultants.


This growing demand to rent HDB flats is a spillover from the red-hot private rental market, where supply is declining and rents have been escalating, say property experts.

This is partly because of an influx of foreigners on the back of Singapore's booming economy, they say. Also, there is a squeeze on rental units, given the number of private properties that have been sold in en bloc sales.

Recent transactions released to The Straits Times by several property agencies included one four-room HDB flat at Crawford Lane, not far from Lavender MRT station, renting at an eye-popping $2,800 a month.

Even on Singapore's outskirts, leases were signed for $2,400 a month for a Bedok North four-room flat and $2,500 for a three-room flat in Jurong East.

Rentals like these have been unheard of since the last property peak in 1996, said Mr Andy Low, marketing director of property agency EM Services, an HDB subsidiary. Rents slid as the Asian financial crisis took hold in 1997.

But flats fetching these high rents are still in the minority. 'The whole HDB market has not reached that level yet,' said Mr Low.

Flats in good locations, with good views, or those which have been recently refurbished, will command higher prices, he added.

Average rents islandwide are still below $2,000, but they are climbing steadily, said Mr Eric Cheng, senior division director of PropNex.

If private sector rents keep soaring, more tenants will turn to HDB flats - and this will cause a further supply crunch and lead to higher rents.

Mr Cheng said current HDB rents still have a buffer of 10 per cent to 15 per cent before hitting 1996 peak prices. Back then, a five-room flat averaged $2,200. The present average is about $2,000, he said.

The figure cited by Mr Cheng is above HDB's average rental rates for each estate published quarterly on its website. For the second quarter, the average monthly rent for five-room flats ranged from $1,100 to $1,700.

Managing director of C&H Realty, Mr Albert Lu, said the rise in rents, coupled with the HDB's recent relaxation of sub-letting rules, has pushed up rental yields - the annual rent expressed as a percentage of the flat's value.

Yields for many HDB flats are now 5 per cent to 8 per cent - a return considered by property experts to be strong.

In March, HDB announced that flat owners may rent out their entire unit after living in them for just three or five years, depending on how they bought the unit. This means over two-thirds of all flats may be sub-let.

Rental yields for HDB flats have typically been lower than those of private properties - usually 4.5 per cent to 5 per cent.

For example, an executive flat in Woodlands which cost $330,000 can now fetch a monthly rent of $2,200. This gives it a rental yield of 8 per cent, said Mr Lu.

But buying up large numbers of HDB flats to make a fast buck is not an option, said ERA Singapore's assistant vice-president Eugene Lim.

Nobody can own more than one flat, and owners are still required to stay for a minimum period of time.

Mr Lim said public housing is still an attractive alternative for tenants to the rising rents in the private sector.

'In the long run, prices will start to come down when more units come online.'