SINGAPORE - Rents for Housing Board flats fell by 0.4 per cent in October, dipping for the first time in more than two years, with analysts citing growth in new flat supply as the main reason.
The last time HDB rents dropped was in September 2021, when it went down by 0.2 per cent.
More HDB flats were leased out in October, based on flash data released on Nov 29 by real estate portals 99.co and Singapore Real Estate Exchange (SRX).
Around 2,830 flats were rented out in October, up 2.4 per cent from 2,763 units in September. On a year-on-year basis, this is a 14.9 per cent increase in HDB rental volume.
Separately, rents for condominium units continued to decline for the third consecutive month, falling by 0.2 per cent in October. Year on year, though, rents rose 10.8 per cent.
Condo rental volumes were also down by 5.4 per cent in October. There were around 5,402 condo units leased in October, compared with 5,713 in September.
Property analysts noted that the overall increase in the supply of units in the public and private housing markets allowed tenants to pressure landlords for lower rents.
Mr Eugene Lim, key executive officer of real estate firm ERA Singapore, attributed the easing of rents to a larger number of landlords lowering their rates amid intensifying competition for a “tighter pool of tenants”.
This comes on top of a continued stream of new home completions, which saw tenants ending their leases and moving into their new homes.
Private property downgraders – who are required to serve a 15-month wait-out period to become eligible to buy an HDB resale flat – and budget-conscious tenants would choose to rent public housing units, as this is the most affordable option, added Mr Lim.
On HDB rental volumes, Ms Christine Sun, senior vice-president for research and analytics at property agency OrangeTee & Tie, said the uptick could be due to more foreign students or tenants signing their leases before the end of 2023.
Mr Lim also cited the higher unemployment rate and slower anticipated wage increment as factors prompting more tenants to switch from renting private condos to HDB flats, as they became more prudent with their budgets.
SRX and 99.co flash data showed that in October, rents for executive flats rose 0.9 per cent, while those for four-room units increased by 0.1 per cent. Conversely, rents for five-room units were down 1.4 per cent and those for three-room flats dropped by 0.6 per cent.
Looking ahead, Ms Sun foresees a stabilisation in HDB rents in 2024, with an uptick of between 1 per cent and 3 per cent.
This is due to a decline in the number of units available for rent, as the number of flats reaching their minimum occupation period will drop to 13,093 in 2024, from 15,748 units in 2023, noted Ms Sun.
Mr Nicholas Mak, chief research officer of property portal Mogul.sg, said declining rents in the private housing market will also translate to lower rents for HDB flats.
Based on 99.co and SRX’s report, condo rents in the city fringes increased by 0.8 per cent, while those in the suburbs dropped 0.9 per cent and rents in the prime area were down 0.3 per cent.
ERA’s Mr Lim added that there may be headwinds in the coming months for the rental market for luxury condos in the prime area amid rising economic gloom. He said some tenants struggling with higher rents in the city fringes may be moving farther out to the suburbs, accounting for the suburbs’ dominant share of condo rental volumes in October, at 34.8 per cent.
This was followed by the city fringes (34.3 per cent) and the prime districts (30.9 per cent), 99.co and SRX flash data showed.
Ms Sun predicted condo rental volumes will continue on a downward trend in November and December due to the year-end holidays.
The condo rental market may experience a further slowdown in 2024 because of the addition of 10,000 private homes slated for completion, she added.
Ms Sun expected the growth in condo rents to moderate to 2 per cent to 5 per cent in 2024, down from 12 per cent to 14 per cent in 2023.
