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Fewer people selling HDB flats immediately after Minimum Occupation Period

Only 470 HDB flats were sold within a year of owners meeting the Minimum Occupation Period last year, half of 2012's numbers.

SINGAPORE: Fewer people are selling their new Housing and Development Board (HDB) flats immediately after meeting the Minimum Occupation Period (MOP), said HDB Tuesday (June 3).

Currently, owners are required to physically occupy their flat for five years, before they are allowed to sell their home in the open market or sublet the entire unit. They are also not allowed to buy or invest in a private residential property during their MOP.

Now, it seems fewer are choosing to sell once they've met that requirement.

According to HDB, there were only 470 flats sold within one year of meeting the MOP in 2013. This is less than half the number seen in 2012, when 1,006 flats were sold.

In 2010, the number was 1,338 -- the highest in the last five years. In 2011, only 1,231 units were sold.

"Last year's HDB resale prices have started to moderate," said Mr Eugene Lim, Key Executive Officer at ERA Realty Network. "We saw prices start to come down, especially towards the second half of last year. So those who are not in urgent need of selling their flat would probably want to wait it out for the next cycle, instead of selling their flat when the market is going down. They are probably waiting for the next upturn."

In the meantime, more are choosing to sublet their flats within one-year of meeting the MOP. There were 412 units sublet last year, up from 268 units in 2012 and 322 units in 2011.

"People see public housing as a price asset, because the minute they sell it, they are not able to generate income and at the same time, they are not able to enter the (HDB) market again," said Mr Mohamed Ismail, CEO of PropNex. "Today we are talking about public housing having a decent rental yield of about 4 to 4.5 per cent, which is marginally higher than private property, which would have 3 to 3.5 per cent (rental yield)." 

"A lot of homeowners feel if they were to dispose of their HDB flat and buy a private property, and subsequently buy a HDB again, they will be forced to sell off their private property," added Mr Lim. "This is the current government policy, so most homeowners if they can afford to, will try and hold on to both their HDB flats and their private property."

HDB owners who buy private property, are not required to dispose of their existing HDB flat. However, private property owners who buy an HDB flat are given six months to sell off their private property after the purchase of the flat.

HDB says over the last five years, the proportion of those who own a private residence and HDB flat concurrently has remained stable at around four per cent. However, analysts say the absolute number could have grown since there are more HDB flats in the system today.

"The base has gotten much bigger," said Mr Lim. "That means there are absolutely more flats in the system today."

"If the percentage increased to double-digits, then we would be concerned." said Mr Ismail. "Are there a lot of people trying to hold on to public housing and yet invest? I think these are very reasonable and acceptable numbers."

With prices in the HDB resale market still moderating, analysts say it is unlikely that HDB apartment owners will see any urgency in selling off their flat in the coming year. Experts say they expect the number of people choosing to sublet their flat to go up, even though rental is likely to remain relatively flat.

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