Private home rents down 6.2% in 2016: SRX

Singapore

RENTALS for condominiums and apartments are taking a hit over the huge supply of private homes available for rent and the business uncertainty among corporates.

In December, rents fell by 1.3 per cent from the previous month, going by the SRX Property price index for non-landed private rentals released on Wednesday.

This was driven by rental slides in the Core Central Region (city area) and Rest of Central Region (city fringe) of 1.7 per cent and 2.6 per cent, respectively. Only the Outside Central Region (suburbs) escaped unscathed, with rents staying unchanged for the month.

For the full year, it is down 6.2 per cent.

R'ST Research director Ong Kah Seng said that this supports his observation of landlords automatically reducing rents for existing tenants upon expiry of their lease, generally by about 6-8 per cent, especially if they are comfortable with the tenants and want them to stay on.

He added that many corporates across industries are downsizing their headcount and letting go of professionals, including foreigners, due to a cautious macro-economic enviroment.

This, in turn, affects the tenant pool. He expects this phenomenon to persist even after mid-2017.

He also expects non-landed private residential rents to fall by about 5 per cent in 2017.

As for private leasing transactions, rental volume decreased by 2.2 per cent in December to about 3,691 units, compared to 3,775 in November.

Year on year, volume was up 17.1 per cent from December 2015's 3,152.

On the public housing front, HDB rentals moved in the opposite direction, increasing 0.2 per cent in December.

Rentals for three-room, five-room and executive flats rose 0.8 per cent, 0.6 per cent and 1.4 per cent, respectively. Only four-room flats recorded a decrease of 0.5 per cent.

Rents in mature estates decreased by 0.1 per cent while those in non-mature estates rose 0.4 per cent.

Year on year, rentals were down 3.7 per cent.

Transactions-wise, HDB rental volume fell 4.6 per cent. An estimated 1,689 flats were let in December, compared to 1,771 the month before.

Volume fell by 13.5 per cent year on year.

Mr Ong said that he expects HDB rents to fall by up to 3 per cent in 2017 as more flats get put up for subletting after flat owners move into their completed private residences.