September saw fewer HDB and condo leases due to lower rents: 99.co and SRX

September saw fewer HDB and condo leases due to lower rents: 99.co and SRX

Condo rentals decreased by 0.2% in September, although HDB apartment rentals increased by 0.1% from August.

October 18, 2024

CONDOsingapore.com

For the second consecutive month, September saw a decline in the number of condominium and HDB apartment rentals.

According to flash estimates from SRX and 99.co provided on Friday (Oct 18), condo leasing volumes decreased 17.2% for the month to 6,172 units rented, down from 7,456 units leased in August.

Rental volumes increased 7.7% year over year. However, rental volumes were 5% lower than the five-year average for September.

The Outside Central Region (OCR) accounted for 34.5 percent of the overall volume, followed by the Rest of Central Region (RCR) at 33.4 percent and the Core Central Region (CCR) at 32.1%.

Rental volumes in the Housing and Development Board apartment market decreased by 11.8% month over month in September, with an estimated 2,314 apartments leased, compared to 2,625 units in August.

Volumes decreased 17.3 percent year over year and 11.7 percent below the September volume average for the previous five years.

The decrease in lease volumes in both markets, according to Luqman Hakim, chief data and analytics officer at 99.co, is a result of tenants "possibly delaying decisions due to ongoing stabilisation of rents."

"The completion of about 7,000 new condo units in the second half of 2024 is expected to increase the rental inventory and possibly ease market tightness further, even though demand is still supported by expatriates, international students, and foreign workers entering Singapore," he said.

Additionally, he issued a warning that when some HDB flat owners move to private properties and renters move to the recently finished condominiums, the market for HDB rentals may decline.

As demand gradually increases, the condo rental market may conclude 2024 flat, according to Mark Yip, CEO of Huttons Asia.

In October and November of 2024, other new projects will be launched. In the meanwhile, some purchasers of these new developments may decide to rent their existing homes, he noted. "The HDB rental market may benefit from this to some extent, and HDB rents may rise by 2% to 3% in 2024."

In September, HDB rentals increased by a meagre 0.1% over the previous month.

A shortage of HDB rental flats has caused rents to rise, according to Wong Shanting, head of research and market intelligence at ERA.

She also emphasised that there is a shortage of HDB apartments available for lease, which is pushing up rates, since fewer units remain within their minimum occupancy time. She thus anticipates that the growing demand would keep driving up HDB rental prices.

In mature estates, rents decreased by 0.1%, whereas in non-mature estates, they increased by 0.3%.

Prices increased by 0.3% for three-room apartments and 0.2% for executive and four-room apartments, respectively, per room type. Five-room apartment rents decreased by 0.2%.

The mature and non-mature estates both saw rises of 3.7% in overall rentals over the course of the year.

Executive apartments had the biggest price rise of 7% year over year, followed by four-room apartments at 4.2%. Rents for three-room apartments increased 3.7%, while those for five-room apartments increased 2%.

In September, rentals in the condo market decreased by 0.2%. Prices decreased 1.1% in the OCR but increased 0.5% in the CCR and 0.2% in the RCR.

Overall rentals decreased 3.6% year over year from September 2023. Prices decreased 4.7% in the CCR, 3.2% in the RCR, and 3.3% in the OCR by area.

Although private rental prices slightly declined last month, a more comprehensive examination reveals that "overall price trends have stabilised, with no significant growth observed," according to Christine Sun, chief researcher and strategist at OrangeTee.

"Private rental prices have not changed over the last six months, from March 2024 to September 2024," she said. "This suggests that rents may have bottomed out and the market has mostly stabilised."

Looking forward, Sun said that a few favourable circumstances may prevent a significant decline in rental costs.

According to her, one reason is that because private property rents have steadied and decreased, more renters may choose to switch from public housing to private rentals.

She also anticipates that the private and HDB rental sectors would benefit from declining interest rates.

"More business confidence and job growth, including potential hiring of expatriates, will result from lower borrowing costs," she added.

Because their house mortgage expenses are expected to drop when they refinance in the future, landlords could be more amenable to negotiating lower rents.