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THE month of August saw weaker private leasing and fewer rental transactions.
Private condominium and apartment rents dipped 0.4 per cent in August, after falling 0.3 per cent in July, according to data released by SRX Property on Wednesday.
Year on year, rents in August 2015 were down 5.7 per cent from August 2014. They were also down 12.9 per cent from their peak in January 2013.
R'ST Research director Ong Kah Seng noted that the rental decline was exacerbated by the increase in private home completions, which intensified leasing competition among landlords.
"Islandwide, there were 10,329 private residential units in 2012 (landed and non-landed) and 13,150 units in 2013, which obtained their temporary occupation permits.
"This rose to 19,941 units in 2014. In H1 2015 itself, 9,945 private homes were completed. A total of 21,563 units are expected to be completed in 2015," he said.
The rise in private home completions in the suburban areas since 2014 continued to weigh on rentals there. Residential rents in the suburbs fell 1.3 per cent, compared to the city centre's 0.7 per cent decrease, and the city fringe's 0.8 per cent increase.
Mr Ong expects condo rents to fall by up to 5 per cent for the whole of 2015. Rents have fallen 3.1 per cent so far this year, with the suburbs the hardest hit (down 4 per cent), according to SRX Property data.
He is looking at possibly 0.5-1 per cent average monthly rent declines for suburban condo rents in the remaining months of 2015, into the first half of 2016.
Transactions-wise, private rental volume fell 1.6 per cent to about 4,097 units leased, from 4,163 units rented in July.
Year on year, rental volume in August 2015 was 13.8 per cent higher than the 3,601 units rented in August 2014.
ERA Realty key executive officer Eugene Lim said: "This rise in volume might not have come from new demand, but rather from existing tenants moving around looking for newer apartments or cheaper rents.
"This is mainly due to more projects being completed and hence more choices available to the existing limited pool of tenants. Moving forward ... we can expect rental volumes to remain resilient."
On the public housing front, HDB rents fell 0.6 per cent in August, after a 0.1 per cent increase in July.
This came as no surprise to Mr Ong. As more private condos get completed, HDB upgraders have been renting out their flats after moving into their new homes, leading to a bigger supply of flats up for lease.
ERA's Mr Lim added that HDB owners have had to correspondingly adjust their rents downwards in tandem with weaker private rents to stay competitive. "Looking forward, as long as the situation of declining rents in the private residential sector continues, we expect rents in the HDB market to continue exhibiting the same trend," he said.
Year on year, rents in August 2015 were down 3.6 per cent from August 2014. They were also down 6.6 per cent from their peak in August 2013.
Mr Ong expects HDB flat rents to continue to fall in 2015 due to more flats being put up for subletting, as flat owners move into their completed condos. A total 5 per cent decline in HDB flat rentals is likely in 2015, he said. HDB rental volume fell 6.1 per cent in August to about 1,646 flats leased, down from 1,752 units leased in July.
But ERA's Mr Lim expects HDB leasing demand to stay resilient in the coming months, given their traditionally strong support base of tenants.
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