August saw a decline in condo leasing volumes; HDB rental demand was muted: SRX, 99.c

August saw a decline in condo leasing volumes; HDB rental demand was muted: SRX, 99.co

In August, rental volumes are 7.6% lower than the five-year average, but 3.8% higher year over year.

September 19, 2024

While condo rental prices continued to rise by 0.3% from July, volumes of rentals reversed their upward trend and fell 14% in August.

According to flash estimates released by SRX and 99.co on Thursday (Sep 19), an estimated 6,994 units were rented in August, compared with 8,136 in July.

In August, rental volumes were 7.6% lower than the five-year average, but 3.8% higher year over year.

Regionally, the Outside Central Region (OCR) accounted for 35.2% of the total volume, followed by the Rest of Central Region (34.5%) and the Core Central Region (30.4%).

For the second consecutive month, condo rents increased by 0.3% in August. The OCR, RCR, and CCR all saw price increases of 0.6%, 0.4%, and 0.2%, respectively.

On the other hand, overall rents fell 3.7% annually. In the CCR, prices decreased 4.5% by region, while in the RCR and OCR, they decreased 3.4%.

"Rents may have bottomed out," according to Christine Sun, chief researcher and strategist at OrangeTee, but additional data in the upcoming months is required to verify whether the market is on a strong recovery path.

"It appears that more foreign workers, international students, and expatriates are coming to Singapore these days, which is leading to more rental enquiries," Sun said.

According to Sun, "the likelihood of rents dropping significantly is low" given the current rental market's limited housing supply.

The rental market has begun to recover, but this could be temporary given that an estimated 7,000 units are expected to be completed in the second half of 2024, said Wong Shanting, head of research and market intelligence at ERA Singapore. In the upcoming months, this will bring in new rental inventory.

In contrast, August saw a 0.4% drop in Housing and Development Board (HDB) rents compared to the previous month.

In mature estates, prices dropped by 0.5%, while in non-mature estates, prices dropped by 0.4%.

Rents decreased by 0.9% for apartments with three rooms, 0.1% for apartments with five rooms, and 0.3% for executive apartments. However, rents for four-room apartments remained unchanged.

Overall, rents increased 4.2% over the course of the year, with non-mature estates rising 3.9% and mature estates rising 4.5%.

In addition, HDB volumes fell 12.3% month over month in August, with an estimated 2,626 apartments rented as opposed to 2,993 units in July. Compared to the five-year average for August, rental volumes were 4.3% lower and down 13.4% for the year.

Three-room apartments accounted for 32.5% of the total volume, followed by four-room apartments (32.3%), five-room apartments (22.7%), and executive apartments (5.6%).

The HDB rental market is beginning to show some weak spots, according to Mark Yip, CEO of Huttons Asia.

According to Yip, "some tenants are gradually relocating into their recently finished condos and are not extending their HDB leases."

He did point out, though, that some HDB owners might decide to rent a HDB flat in the interim and upgrade to a new condo as a result of the interest rate reduction. With rents rising by 2 to 3 percent in 2024, this might help the HDB rental market.