HDB and private rents edge up 0.2% in May: SRX

Rental volumes continue to decline, falling by 3.2% among private homes and 12% among HDB homes

Thu, Jun 14, 2018

Yunita Ong


RENTS in May inched up just 0.2 per cent for both private and HDB homes from the previous month, as volumes continued their decline, according to flash estimates released by real estate portal SRX Property on Wednesday.

Year-on-year, rents from non-landed private rentals improved marginally by 0.8 per cent; the May showing was 18.9 per cent lower than its peak in Jan 2013.

Compared to April, rents of condos and private apartments did not budge in the prime district or Core Central Region (CCR), but edged up by 0.4 per cent in the city fringe or Rest of Central Region (RCR), and 0.2 per cent in the suburbs or Outside Central Region (OCR) areas.

Commenting on the slight recovery, OrangeTee & Tie's head of research and consultancy Christine Sun noted robust demand in certain areas, especially for homes near good schools and MRT stations, and for bigger units in particular.

"Some of the demand could be from recently displaced en bloc owners," she said. "Some en bloc owners seem to have a stronger preference for larger units in the city fringe areas or mass-market region that are near their old residence."

Rental volume declined 3.2 per cent in May from April to 4,674 units, and was 5.2 per cent lower than the some 4,929 units rented in May 2017.

In the HDB segment, rents were down from May 2017 by 2.7 per cent, and lower by 15.3 per cent compared to its August 2013 high.

Executive director of ZACD Group Nicholas Mak said this could be due to more Build-To-Order (BTO) flats reaching their five-year minimum occupation period (MOP), which makes their owners eligible to sub-let.

"A significant supply of BTO flats were offered for sale between 2010 and 2013. The new flats which have reached their five-year MOP can now be offered up for rent, therefore increasing the supply of rental flats in the market," he said.

Compared to April, rents for three-room flats and executive flats decreased by 0.4 per cent and 0.7 per cent respectively from the previous month, while four-rooms and five-rooms increased by 1.1 per cent and 0.2 per cent respectively.

Rental volumes fell 12 per cent to 1,885 flats from April's showing, and 1.6 per cent lower than May 2017.

A "gradual and gentle upwards trend" in the private rental index can be expected for the rest of the year, said Mr Mak of ZACD, as the local employment market improves and the demand for foreign talent rises.

This could spill over to the HDB leasing market and perhaps cause the HDB rental index to bottom this year, he said.

On the other hand, Ms Sun believes that "the closing gap between public and private home rentals may continue to impact the HDB rental market."

"However, larger HDB units may see some respite as some displaced en bloc owners may rent these units for their space and affordability," she said.