RENTS of private condos continued to soften in November, largely within the expectations of property consultants who are projecting that the weakness will run into next year, given the looming supply glut.
SRX Property flash estimates put the slide in rents of private non-landed homes at 0.8 per cent, making November the 10th consecutive month of decline. Rents have fallen 5.7 per cent since the start of the year and 5.3 per cent from November 2013.
The rental decline was more severe in the suburbs - 1.2 per cent; the dip was 0.3 per cent for city apartments and 0.7 per cent for city-fringe units.
Leasing volumes also shrank. The estimated total of 2,892 units rented out during the month was down 11 per cent from October, but 9.8 per cent higher than in November 2013.
ERA Realty key executive officer Eugene Lim said that the leasing market for private condos is facing a double whammy - an upcoming supply glut and a slowdown in demand from the continued economic restructuring.
Older units have taken a bigger hit, as tenants prefer newer ones.
This can only get worse next year, with rents likely to fall by as much as 8-10 per cent, said Mr Lim.
However, the strong leasing volumes this year - the number of leases inked hit 46,632 in the first nine months of the year, up 8.7 per cent over the corresponding nine months last year - could be attributed to tenants switching over to newer units because the falling rents work in their favour, said property consultants.
Savills Singapore research head Alan Cheong expects rents to dip 7 per cent this year and 3-5 per cent in the first half of next year.
He noted that the continued trimming of manpower in the finance sector and expatriates' being given smaller housing budgets have put pressure on the demand for condos, especially those in central areas - unless landlords are willing to rent out the rooms piecemeal.
"Those willing to rent out by rooms could find the sum-of-the-parts greater than renting the whole unit to a single tenant," he said.
Meanwhile, the HDB rental market is holding up better, perhaps also because expatriates' housing budgets have shrunk. Another factor is that, newly minted Singapore permanent residents, ineligible to buy HDB flats because of a three-year waiting period, are renting their flats, consultants said.
SRX Property data shows rents of HDB flats dipping 0.1 per cent in November from the month before, smaller than the 0.5 per cent decline in October; rents of public flats are down 2.2 per cent from a year ago.
Executive flats bucked the trend in November, with a 3.5 per cent pick-up from a month ago.
Mr Lim suggested that this could be a blip, given that larger HDB flats are competing with private condo units for the same group of tenants.
Increasingly now, tenants are able to rent a two-bedroom unit for as low as S$2,500 a month in suburban areas; previously, such units would have cost at least S$3,000 a month to rent, he said.