August saw another increase in condo and HDB rentals, but volumes remained lower year-on-year

Sep 14, 2022

The number of condominium and HDB (Housing Board) rentals increased in August, marking the 20th and 26th consecutive months of growth, respectively, despite the fact that volumes continued to fall short when compared to the same period the previous year.

The flash data that was released by SRX Property and on Wednesday, August 14 indicated that the monthly rental prices for condominiums in the month of August increased by 3.2 percent when compared to the previous month. The core central region (CCR) was the area that contributed the most, increasing by 3.7 percent. After this came the remainder of the centre region (RCR) at 3.1 percent and the outer central region (OCR) at 3 percent, respectively.

According to Pow Ying Khuan, the head of research at 99 Group, the monthly increases in CCR and RCR rentals in August were the largest they had been during the course of the previous year.

Prices in the CCR, RCR, and OCR all increased by 27 percent, 27.2 percent, and 28.2 percent, respectively, from August of the previous year, which contributed to the overall rent increase of 27.5 percent year-over-year.

The number of condos that were rented out in August 2022 was anticipated to be 4,524, which is a little increase of 0.4 percent month-over-month from the previous month's total of 4,506 rentals. They were, however, still 6.3% lower when compared to the amount of the previous year, and they were 8% lower than the volume that has been considered to be the 5-year average for the month of August.

When broken down by area, 37.1 percent of total volumes originated in the CCR, while 34.8 percent originated in the RCR, and 28.2 percent originated in the OCR.

Pow theorises that the difference in condo rental prices and volumes from one month to the next and from one year to the next across all three regions could be attributable to the recent easing of restrictions on travel between Singapore and other nations, the resumption of work in offices, and an increase in the number of non-Singaporeans moving closer to the city in search of a more permanent residence.

"This is in contrast to the previous year, when working from home was prevalent, and a big demand shifted towards suburban houses owing to cheaper rental prices," remarked the head of research at 99 Group. "This year, however, people are less likely to work from home."

Prices on the HDB rental market rose by 2.4 percentage points from the previous month. This increase was driven by higher rents in mature estates, which rose by 2.6 percentage points, while prices in non-mature estates rose by 2.3 percentage points.

The month-to-month rent for apartments with four rooms had the biggest rise, at 3.5 percent, followed by executive flats, at 2.8 percent, apartments with three rooms, at 2 percent, and apartments with five rooms (1.9 per cent). According to Pow of 99 Group, the much greater demand for 4-room apartments in August might perhaps be attributable to significantly more appealing rental pricing and more availability in comparison to 5-roomers.

Rentals climbed by 21.6 percent year over year, with rents for mature and non-mature estates climbing by 21.3 percent and 21.7 percent, respectively, over the same time period. The cost of renting a three-room apartment rose by 21.5 percent, the cost of renting a four-room apartment rose by 20.8 percent, the cost of renting a five-room apartment rose by 22.9 percent, and the cost of renting an executive apartment rose by 19.7 percent.

HDB rental volumes increased by 3.8 percentage points month-on-month to an expected 1,765 units, up from 1,700 units that were rented in July 2022; however, they decreased by 1.3 percentage points when compared to the previous year. The month of August saw volumes that were consistent with being 3% lower than the 5-year moving average volume.

In August, the room type that contributed the most to total volumes was the four-room unit, which contributed 38.3 percent, followed by the three-room unit, which contributed 35.3%. The overall rental volume of HDB properties was increased by 21.5% thanks to the contribution of five-roomers and 4.9% thanks to that of executive flats.

As "the tight housing situation is not anticipated to be relieved any time soon," Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, believes that total condo and HDB rental costs may continue growing or remain at present levels in the coming months.

She said that "we do not anticipate rental demand to rebound too much owing to some price resistance" until there is a big ramp-up in foreign employment, which may push rental demand higher. "We do not expect rental demand to rebound too significantly due to some price resistance."

Sun anticipates that the luxury market will benefit from Singapore's recent initiatives to attract top foreign talent in key sectors. These initiatives include the issuance of new work passes for high earners, and Sun believes that these initiatives will be beneficial to the luxury market. She also anticipates an increase in demand for big private residences, especially landed properties, due to the fact that international expats who sponsor their dependents might remain in the country for up to five years.

Nicholas Mak, head of research for ERA Realty, believes that even though highly paid foreigners will be "in the minority" and "may not move the needle much" in the overall rental index, their housing demand and rich accommodation budgets could still stimulate buying and leasing demand in the high-end housing market. Mak made these statements despite the fact that he believes such highly paid foreigners will be "in the minority."

"For every one of these highly-paid foreigners arriving in Singapore, there may be a few dozen additional foreigners who would seek accomodation of a more humble kind, such as HDB apartments. This could be a problem. According to his observations, all indications point to a short-term upward pressure on rental prices in both the HDB and the private housing sectors.