HDB and condo rents fell in Jan but volumes rose: SRX, 99.co
The rental prices of both public and private housing continued to decline in the first months of the year. Both the Housing and Development Board and condominiums posted a decrease of 0.7 percent from December 2023.
SRX released a report by 99.co on Tuesday, February 20th. The data showed that the Core Central Region was the only region to see rental growth of 0.4 percent. Rents in the Rest of the Central Region declined 1.6% and rents outside the Central Region decreased 1 percent.
Overall rents rose by 0.4% on an annual basis, with the OCR seeing a 2.4% increase. The CCR saw a rental decline of 0.7 percent and the RCR a 0.6 percent.
The condo rental price has fallen 4.3% from its all-time peak since the rise in supply last summer.
The retrenchment of workers has led to lower tenant demand. Some landlords are willing to compromise on rents rather than have their units empty for a long time.
The private rental volume grew by 6.2 percent, with 6,016 estimated units rented in January 2024 compared to 5,665 in the preceding month.
The latest figures, however, are 4.6 percent lower year-over-year and 13 percent lower than the average five-year volume for January.
By region, 38.5 percent of condo rentals were from the OCR. The RCR accounted for 32.6 percent, and the CCR accounted for 28.8 percent.
The demand for private rentals has increased since the end of the year holidays, as tenants have renewed or signed new leases at the beginning of 2024. The Chinese New Year holiday is expected to cause a drop in condo rental volume for February. Landlords will not be opening their properties during this time.
The HDB market saw a growth of 4.6 percent month-on-month, with an estimated 3,024 apartments rented in December 2023 compared to 2,892 units in January 2023. This represents a 5.3% increase over January 2023 and 1.4 percentage points above the average five-year volume for January.
HDB rents were also down, falling by 0.7 percent from December 2023. Rents in mature and non-mature estates fell by 1.2 and 0.3 respectively.
HDB’s January rents for four-room units remained the same month-on-month, while three-room rents fell by 1.2 percent and executive flat rentals dropped by 3 percent. Five-room rentals dipped 0.6 per cent. Overall rents increased 8.6 percent from January 2023. Mature estates saw a growth of 7.5 percent, while non-mature estates grew by 9.7 percent.
The five-room unit saw the highest rent increase, at 9.2 percent. The four-room unit (8.7%), executive unit (8.2%) and three-roomer (7.8%) were all followed.
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HDB rental rates are based on the type of flat. The most common flat is a four-roomer, with 38.4%, followed by a three-roomer (33.6%), a five-roomer (22.8%), and an executive unit (5.2%).
Renting four-room apartments has increased since Dec 2023, when this type of flat contributed 36.2% of total volumes.
Singapore’s economy has experienced more retrenchments. Tenants may have chosen to be more cautious and rent a smaller apartment that is more affordable.
The decline in rental rates on the HDB market may only be temporary, as higher volumes indicate a strong demand. HDB rentals continue to be attractive for tenants seeking affordable housing. If the drop in condo rents continues, it may narrow the gap between HDB and condo rents. Then, some HDB tenants may be tempted by the lower rents of condos. The HDB rents could then start to move southwards.
The Singapore Government’s Parenthood Provisional Housing Scheme voucher (PPHS), which is available to some smaller HDB resale apartments, could increase the demand for their rental. It is unlikely that HDB rents will increase in the future. Even if the prices rose, they would likely affect smaller HDB apartments as couples who take up this scheme are unlikely to lease larger flats because of cost concerns. The extent of the effect on rental demand and price will depend on the number of people who qualify for vouchers, and the amount that is given.
