Tuesday, 19 February 2013

More holding on to their HDB flats

Percentage who sell after minimum occupation period dips, reversing trend
By Daryl Chin, The Straits Times, 18 Feb 2013

A HIGHER percentage of home owners are holding on to their Housing Board flats, reversing a trend that had been rising in the past four years.

According to data from the Housing Board yesterday, the percentage of home owners who sold their property within the year after it hit the five-year minimum occupation period (MOP) was 11.8 per cent last year.

It had been climbing steadily, from 4.3 per cent in 2008 to 18.3 per cent in 2011.

These figures are for flats bought directly from the HDB.

Property analysts say the drop can be attributed to various factors, chief among them being sky-high private property prices that deter HDB upgraders, and restrictions incurred after selling a flat.

International Property Advisor chief executive Ku Swee Yong said: "The fact that more people are reluctant to sell their flats is a sign that they have difficulty gaining entry into the private property ladder."

Another reason, he proposed, was that flat owners also believe that HDB flats have room to appreciate further, outpacing their private counterparts.

Resale HDB flat prices went up 6.6 per cent last year, while private home prices increased by 2.8 per cent.

PropNex chief executive Mohamed Ismail said the restrictions on flat ownership have also played a part.

Since August 2010, private property owners have been required to sell their existing property if they wanted to buy an HDB resale flat.

But HDB owners who have fulfilled their MOP are allowed to purchase a private property and hold on to both at the same time.

That round of measures in 2010 also revised the MOP for letting out a flat from three years to five years.

"Once you upgrade and sell your HDB flat, it's very hard to come back in again," Mr Ismail said, adding most people are cognisant of the fact that HDB flats typically give higher rental yields.

SLP International's head of research Nicholas Mak said: "It's increasingly difficult to own an investment property, so most owners would hold on to their flats, which they likely bought at subsidised prices, while building their finances to buy an additional private home."

In tandem, the number of flats being sublet out also dipped last year, according to the HDB.

Some 3.1 per cent of home owners let out their flats last year, compared with 4.8 per cent in the year before.

"There are two reasons for this," said Mr Ismail. "The first is that many flat buyers in recent years were genuinely in need of housing, while the second is that the current economic turmoil overseas means fewer families are leaving the country for work."

HDB flat owner Steve Tan, 38, said he has no plans to sell his four-room flat in Hougang, even though he would stand to make a tidy sum.

"If I sell high, I need to buy high. Far better to have a roof over my head and wait till condo prices start dipping," said the engineer.

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