SINGAPORE - New Launch Condo's rental market saw its fourth straight month of decline in November, while the HDB rental market bounced back slightly.
According to flash data from property portals SRX and 99.co on Dec 27, condo rents fell 1.4 per cent month on month in November, with the biggest drops in the prime areas and city fringes, or core central region (CCR) and rest of central region (RCR), at 2 per cent each.
Rents in the suburban areas, or outside central region (OCR), stayed the same.
Compared with November 2022, overall rents were still up 6.3 per cent, with OCR rents leading the growth at 7.7 per cent, followed by RCR rents at 6.4 per cent and CCR rents at 5 per cent.
Huttons Asia's chief executive Mr Mark Yip said that November's condo rents were the lowest since May 2020. He blamed the landlords who lowered their rents due to oversupply and weak demand.
New Launch Condo Rents Fall for the 4th Month in November, HDB Rents Rise
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He said: "Private condo rents will remain soft in December 2023, making it the first flat year for rents since the pandemic."
OrangeTee & Tie's senior vice-president for research and analytics Ms Christine Sun said that the private residential rental market may see slower growth in 2024, at around 2 per cent to 5 per cent.
This would be much lower than the 29.7 per cent growth in 2022, and the 12 per cent to 14 per cent range expected for 2023, she added. The condo rental volume also decreased in November, by 8.4 per cent month on month to an estimated 4,950 units, from 5,402 units in October. This was 1.5 per cent lower year on year, and 12 per cent lower than the five-year average for November. About 36.6 per cent of the total volume came from the OCR, followed by 32 per cent from the RCR and 31.3 per cent from the CCR.
Mr Yip of Huttons said that the lower condo rental volume was due to more tenants opting for cheaper housing options like HDB flats.
99.co's chief data and analytics officer Mr Luqman Hakim said: "We expect the volume to drop further towards the end of the year as the holiday season kicks in, but to recover in the first quarter of 2024."
ERA Singapore's key executive officer Mr Eugene Lim predicted that private residential rents will be more resistant in the first quarter of 2024.
He said: "Annual values and property taxes will increase in 2024, and landlords will have to bear the cost amid a softer rental market."
He added: "This could mean that some landlords who can afford to wait will not lower their rents easily in the first quarter of 2024, despite a softer market."
New Launch Condos, rental market performed better in November, with rents rising 0.8 per cent month on month, after a dip in October. Rents for mature estates rose by 1 per cent, and non-mature estates by 0.6 per cent. All room types saw rent increases, with executive flats leading the way at 1.7 per cent, followed by four-room flats at 0.9 per cent, five-room flats at 0.7 per cent and three-room flats at 0.4 per cent.
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Year on year, overall rents in the HDB rental market were up 12 per cent, with non-mature estate rents rising 13 per cent, mature estate rents rising 11.2 per cent, and five-room flats recording the highest rent growth at 14.1 per cent.
The HDB rental volume also declined in November, by 5.7 per cent month on month to 2,693 units, from 2,856 units in October. However, this was 0.3 per cent higher than the five-year average for November, and 10 per cent higher than November 2022.
By room type, 37.7 per cent of the HDB rental volume were from four-room flats, followed by 33.4 per cent from three-room flats, 22.8 per cent from five-room flats and 6.2 per cent from executive flats. The outlook for the HDB rental market was mixed, with ERA forecasting average rents to grow by up to 10 per cent in 2024.
ERA's Mr Lim said: "HDB rentals are still an affordable choice for housing in Singapore, and the temporary relaxation of the occupancy cap could benefit S Pass holders and work permit holders the most. This could allow more tenants in one rental flat, and help them save on rental costs."
Ms Sun from OrangeTee & Tie expected the HDB stock to continue to shrink, but did not expect a surge in rental growth in the next year, as affordability will still be a key factor for tenants.
Huttons' Mr Yip expected HDB rents to be flat in December, with rents for the whole year increasing by 9 per cent to 10 per cent.
He said: "The change in occupancy rate for larger condos and HDB flats from January 2024 may affect the demand, as tenants may switch from smaller to larger units. Rents for larger units may go up, while rents for smaller units may face some pressure."
Adapt from THE BUSINESS TIMES
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