Concerns are raised by the record S$8,000 monthly rent for a three-room HDB flat in B

Concerns are raised by the record S$8,000 monthly rent for a three-room HDB flat in Bukit Merah

Given that the median monthly rent for a three-room flat in the estate was S$2,970 during the second quarter, this is regarded as an anomaly.

September 25, 2024

CONDOsingapore.com

In August, the most expensive rent for a public housing flat was set when a three-room Housing and Development Board (HDB) flat in Taman Ho Swee, Bukit Merah, was leased for S$8,000 per month.

On its website, HDB stated that this is in accordance with its database of market rental rates, which are determined by the statements made by flat owners in their rental applications.

According to Christine Sun, chief researcher and strategist at OrangeTee Group, the outlier deal nearly triples the median rent for three-room apartments in the area. This stands in contrast to the public housing rental market as a whole, which has recently displayed "general weakness" in terms of volumes and demand.

According to caveats data, the Taman Ho Swee HDB block's units are 54 square meters in size, with 45 years remaining on the lease.

Given that the flat is close to the Havelock MRT station and the Great World shopping centre in the River Valley, Sun speculated that the renter may have paid more for the unit.

According to her, the Central Business District and Singapore's renowned Orchard Road shopping belt are both very close to that highly sought-after location.

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It is acknowledged that the apartment is not a three-room apartment that is attached. Married couples and/or families can buy two adjacent apartments and physically turn them into one jumbo apartment under HDB's conversion scheme. The agency's evaluation of the apartments will also determine this.

HDB resale values have experienced a significant increase. According to its most recent data, resale prices increased by 2.3% in the second quarter, which was faster than the 1.8% increase in the first. Prices increased 6.6% year over year.

In Q2, however, transaction volumes increased by 4%. This represented a 12.9% year-over-year increase.

In recent months, HDB rents have also surpassed those in the private sector.

The median rent for non-landed private residences, excluding executive condominiums, increased 1.2% between January and August, according to data from URA Realis.

In contrast, public housing rents increased 3.1% during the same time period, according to the SRX rental index.

An anomaly

However, Sun emphasised that high HDB flat rents are an exception, especially the S$8,000 monthly rate seen in Bukit Merah.

The second quarter of this year saw median rents in Bukit Merah of S$2,970 per month for three-room apartments, S$3,800 for four-room apartments, and S$4,000 for five-room apartments, according to HDB data.

A three-room flat in Taman Ho Swee's same block was leased for S$3,300 per month in July. In separate blocks within the same estate, two additional three-room apartments were leased for S$2,200 and S$3,000 per month.

Four three-room apartments in the Taman Ho Swee estate were leased for S$2,300 to S$2,800 per month as of September.

Additionally, Sun reported that in August, the median monthly rent for all flat types in Bukit Merah was S$3,400. For the entirety of Singapore, this amount came to S$3,100.

However, she stated that the S$8,000 price tag would not be justified even if the rented unit were a larger adjoining one. For example, in August, a standard five-room flat in Bukit Merah was rented for S$4,150 per month.

According to Sun, fewer tenants paid exorbitant rental fees for HDB apartments overall in 2024.

Compared to 823 units during the same period last year, 678 units were leased for a minimum monthly rent of S$4,500 during the first eight months of this year.

According to her, the number of apartments leased for at least S$5,000 per month decreased from 228 to 152 during that time.

Four- and five-room HDB apartments on Cantonment Road, Dawson Road, Ghim Moh Link, Holland Close, Jalan Tenteram, and Strathmore Avenue are among those that rent for S$5,000 or more a month.

Similarly, in the first eight months of this year, 10 apartments were leased for S$6,000 or more per month, compared to 21 in 2023.

According to Sun, these "high-priced" units make up a very small percentage of all rental deals.

For example, between January and August, 0.6% of all transactions involved 152 units leased for at least S$5,000 per month. Only 0.04% of all transactions during the same time period involved the 10 units that were leased for at least S$6,000 per month.

"This is consistent with the overall deterioration that the HDB rental market has experienced lately," Sun stated. "Some tenants, particularly locals renting larger apartments, may have moved into the private market due to the softer private rental prices, especially in the suburbs. They may have been drawn to the competitive rates offered by landlords."

The chief executive officer of Huttons Asia, Mark Yip, also mentioned that company closures in the food and beverage and retail sectors seem to have reduced demand in the HDB rental market.

Public housing rental volumes decreased from 2,993 units to 2,626 units last week, according to flash estimates published by SRX and 99.co.

Over the last two years, fewer apartments have reached their minimum occupation period, which has reduced the number of rental units available, according to Sun.

As a result, she anticipates leasing volumes to drop from 39,138 units last year to between 36,500 and 38,000 units this year.

As a result, rents could increase by 2 to 3 percent this year, which would be much slower than the 10.2 percent growth in 2023, she said.