WITH the relaxation of Housing Board restrictions over the years, it has become easier for a savvy Singaporean to make a relatively quick buck from buying a flat.
Since 2007, an owner need live in his flat for only three years before he can rent it out, if the flat was bought without a housing grant or subsidy.
For someone who enjoyed a subsidy or a grant, it is five years.
It is therefore no surprise to hear of people with investment acumen snapping up flats even if they already own private property, with an eye on the potential rent they can earn.
It is no small sum. Three-room flats in Toa Payoh fetched a median rent of $1,500 a month in the April to June period.
Rising resale prices could also mean that some buyers are taking a bet of another sort – rushing for flats in prime locations in the hope of getting a windfall when they sell them after the minimum occupation period.
Disgruntled house-hunters have asked if private property owners should be allowed to buy resale flats at all, given that the resale market is where first-time home-seekers head to if they cannot wait out the three years needed for the HDB to build subsidised flats.
But just how much of an impact do these investment-driven buyers have on the market?
When Insight asked the HDB what the proportion of private property owners among flat buyers was, it replied that ‘exact figures are not readily available’, but that the proportion was ‘low’.
Meanwhile, there are no ready statistics on the number of flat buyers who sell off their properties immediately after the mandated period.
The HDB carries out periodic inspections to ensure flats are occupied, but policing is admittedly difficult. About 23,000 flats are now rented out legally. The number of recalcitrant owners who rented their flats illegally has dropped over the past three years, from 62 in 2007 to 17 from January to August this year.
As for flat owners who do not occupy their flats, the HDB has taken action against only one household since 2007. The board is in the process of acquiring it from the offending owners.
Property agency chiefs do not think investors hold much sway over the HDB resale market.
A private property owner who buys a resale flat would have to change his home address to that of the flat for at least three years. PropNex’s chief executive Mohamed Ismail doubts most private property owners want that hassle.
In fact, given the climb in resale prices, investors are probably staying away, says ERA Asia-Pacific’s associate director Eugene Lim.
He tells Insight: ‘Buying at higher prices means lowering the rate of rental return. Most savvy investors will want to buy low and rent high to maximise returns.’
Economist Liu Yunhua from Nanyang Technological University feels that home-seekers should not begrudge the small minority of private property owners who buy resale flats for investment. After all, they are not entitled to the housing subsidies afforded to the majority of Singaporeans.
He says: ‘As long as they do not get direct help from the Government, let them use their own method to get a share of land wealth. Their impact is very limited anyway, as they can buy only one flat each.’
Given the paucity of statistics, it is hard to say whether investors are driving up the prices of resale flats. Perhaps it is time for the HDB to start tracking home ownership patterns on this front.
Source: Straits Times, 17 Oct 2009
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