http://www.straitstimes.com/archive/...slide-20141211

Leasing market continues slide

Private and public landlords face pressure from flood of new apartments

Published on Dec 11, 2014 12:57 AM

By Cheryl Ong


THE weak property market continues to hit the leasing sector for public and private homes, with fewer contracts being signed and rents on the slide.

Rents of private apartments slipped 0.8 per cent in November from October - a losing streak of 10 straight months, according to estimates from the Singapore Real Estate Exchange (SRX) yesterday.

This came on the heels of a revised 0.8 per cent slip in October from September.

The monthly rental index, compiled from data from property agencies, is down 5.3 per cent in November from a year earlier.

There were 2,892 leases signed last month - down 11 per cent from the 3,251 homes rented out in October.

The lacklustre leasing performance was hardly surprising, given the step-up in new home completions this year, said market watchers.

They added that government moves to tighten the inflow of foreign talent are putting pressure on demand while housing allowances for expatriates have been crimped.

"Tenants have more choices and more limited housing budgets... Their mindset towards renting is very practical," said Mr Ong Kah Seng, director of R'ST Research.

"Previously, tenants tended to work around what the landlords asked, because they liked the property. Now, their liking for the property is conditional on the asking rents matching their affordability."

There will be 20,852 private apartments completed this year - well up on the 13,150 units built last year - giving tenants more options and more bargaining power, he added.

Mr Ong also pointed out: "In newly completed developments where many units are put up for rent at the same time, some owners might slash rentals to attract tenants. Some tenants might not renew the leases of their existing units and actually take a newer and cheaper unit in the vicinity."

The languishing rental market was most pronounced in the suburbs, where half the 8,732 apartments that went on the market in the past year were concentrated. Rents there slipped 1.2 per cent from October to November, while those in the city-fringe areas fell 0.7 per cent.

City-centre units fared a little better, with a 0.3 per cent decline in the same period.

Mr Wong Xian Yang, research manager at OrangeTee, said a significant number of newly completed units are owned by Housing Board (HDB) upgraders who are choosing to rent out their public flats after moving into their new private homes.

And with rents of private apartments continuing to fall, demand might shift from HDB flats to the private market as the rental gap closes, he said.

The heightened leasing competition in the public market was evident in the statistics: Only 1,596 HDB flats found tenants in November - a 1.5 per cent fall compared with the 1,621 units rented out the month before.

Overall, HDB rents slipped 0.1 per cent from October to November. Rents for five-room flats fell 1 per cent and three-roomers registered a 0.2 per cent decline. But executive flat rents picked up 3.5 per cent and rents for four-room homes remained unchanged from October.

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