Rents dip in Sept, but resale market picks up

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Rents dip in Sept, but resale market picks up

Lease transactions fall 14%; prices in suburbs worst hit

Published on Oct 15, 2014 1:38 AM

By Cheryl Ong


LANDLORDS again bore the brunt of the ailing rental market as rentals dipped and tenants were hard to find last month, amid a glut of newly completed homes. However, on a brighter note for property owners, transactions in the resale market picked up, although overall prices fell.

Rentals for condominium units slid for the eighth straight month, by 0.2 per cent last month, flash estimates from the Singapore Real Estate Exchange showed yesterday.

Fewer units found tenants, with the number of apartments leased out last month falling 14 per cent to 3,171 units from the previous month.

"The rental market is feeling the pressure from increased new completions, especially in the suburbs. Because of a smaller inflow of foreign professionals, this is the impact on the leasing market," said Mr Ong Kah Seng, director of R'ST Research.

Mr Ong was unsurprised that the languishing rental market was most pronounced at suburban projects, where prices slid 0.9 per cent from August. The bulk of completions is in the suburbs.

Rents in the city-fringe areas fell 0.6 per cent, but leases for luxury homes in the city centre finally picked up by 0.3 per cent, after weakening for five straight months.

On the resale front, more condo units changed hands last month, but that did not prevent a 0.3 per cent slip compared with August.

But market watchers pointed out that monthly fluctuations of less than 3 per cent could be "insignificant" as the potential consequences for the larger market could be negligible.

Compared with the same month a year earlier, overall resale prices of private non-landed properties slipped 4.6 per cent.

"The volume of transactions on the market is not as huge as compared with a year ago, so the index can fluctuate depending on the type of property sold," said Mr Mohd Ismail, chief executive of PropNex Realty.

The per-square-foot price could differ greatly between a five-year-old and 20-year-old resale unit, for instance.

Mr Ismail also noted that the luxury segment is still the weakest residential segment, even though prices of city-centre homes crept up 2.9 per cent last month.

"There could have been some ad hoc deals," he said.

"There have been some genuine buyers waiting on the sidelines from the start of the year for a larger correction, but they have come to realise that it is not going to happen as prices have remained relatively stable."

Suburban condominium units were cheaper by 2.1 per cent, while the price of city-fringe units gained 0.9 per cent.

Such marginal price changes are largely caused by the stalemate between sellers and buyers. Experts said that the cost of debt is still low for home owners, and that sellers who lower their expectations fear they might not be able to buy another property.

A total of 468 units were resold last month, up 15.3 per cent from August.

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