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Rents of private and HDB flats fall 0.6% in August: SRX

Increase in rental volumes in both segments reflects shorter leases amid uncertain economic conditions

By Lynette Khoo

[email protected]

@LynetteKhooBT

Sep 15, 2016


RENTS of private non-landed homes and Housing & Development Board (HDB) flats in Singapore slipped 0.6 per cent in August compared to July. Both segments saw an uptick in rental volumes last month, SRX Property estimates on Wednesday showed, a reflection of the current leasing landscape where shorter leases are increasingly more sought-after amid uncertain economic conditions.

Flash reports on rentals by SRX Property typically capture around 80 per cent of the month's transactions on average at the time of the reports' publication.

Volume estimates for transactions not yet captured are based on the estate agencies' historical submission pattern and timeline, taking into account seasonal periods during the year.

Based on SRX Property's estimates, rental volumes of private non-landed homes rose 3.4 per cent to an estimated 4,595 units last month, representing an 18.1 per cent increase from August 2015.

HDB rental volumes inched up 0.3 per cent to an estimated 1,719 flats, but still 4.1 per cent less than a year ago.

PropNex Realty group district director Chris Choo noted that there were seasonally more foreigners taking up leases here from June to August before the start of the term for international schools.

A lot of transaction volumes lately have been a result of more tenants opting for one-year leases and these leases coming due, he added. "In the past, tenants would take up two-year leases but the environment is uncertain for them now, so they are unsure if they will be here for one or two years. At the same time, they know that rentals are coming down, so they believe that one year later, they can bargain for lower rentals."

In the private non-landed segment, rents in Rest of Central Region (RCR) and Outside Central Region (OCR) dropped 0.6 per cent and 1.5 per cent respectively, but rents in Core Central Region (CCR) rose 0.5 per cent.

Compared to a year ago, overall non-landed private-home rents in August were down 4.7 per cent, with CCR inking the smallest decline of 0.6 per cent among the regions. Overall rents were still 17.2 per cent below the peak in January 2013.

"As there will be substantial private residential properties completed in 2016, it is expected that average non-landed private residential rents will fall by about 5 per cent in 2016," said R'ST Research director Ong Kah Seng.

"There will be continual tussle for same set of tenants between a HDB four-room or five-room flat, and smaller newly completed condos in vicinity," he added.

According to SRX Property estimates, rentals for HDB three-room, four-room, five-room and executive flats dipped 0.4 per cent, 0.6 per cent, 0.1 per cent and 1.6 per cent respectively.

Advising landlords to be less picky with their choice of tenants in the current climate, Mr Ong also recommended that landlords start to offer renewals around three months before any existing lease expires, at current rents or even at up to 7 per cent lower, to minimise the possibility of the unit being vacant for months after the tenant moves out.