Condo, HDB rents continue to climb in January; HDB volumes rebound: SRX, 99.co

CONDOMINIUM and Housing and Development Board (HDB) rental prices continued to rise in January, flash estimates from SRX and 99.co released on Tuesday (Feb 28) showed.

Rents for the condo market climbed 1.4 per cent from December 2022, the lowest increase in the past 11 months. The growth is led by a 1.8 per cent month-on-month increase in the Core Central Region (CCR), while rentals for the Rest of Central Region (RCR) and Outside Central Region (OCR) rose on month by 1.7 and 0.8 per cent, respectively.

Huttons chief executive Mark Yip said that though landlords tried to pass the increase in property tax to tenants, the resistance displayed by tenants translated into a smaller rent increase in January.

Yip added that amid an uncertain economic outlook, some landlords of older condos may choose to play defensive to hold on to their tenants, which may moderate the growth in condo rents to between 10 and 15 per cent in 2023.

Year on year, overall rental prices for condominiums grew by 33.2 per cent with rents in the CCR, RCR and OCR increasing by 31, 34.1 and 33.3 per cent respectively.

Condo rental volumes, however, fell 0.9 per cent from that of December, with an estimated 6,285 units rented in January compared with an estimated 6,345 units rented previously. This represents a 15.3 per cent year-on-year decline in volume.

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Breaking it down by region, 37.9 per cent of January’s volumes were from the OCR, 33.2 per cent were from the RCR and 28.9 per cent came from the CCR.

Meanwhile, HDB rents for January increased by 0.6 per cent from the previous month, with mature and non-mature estate rents rising by 1.4 and 0.2 per cent respectively.

Rents for three-room and executive units rose 1.3 and 2.9 per cent respectively, while four-room and five-room units were up by a marginal 0.1 and 0.3​​ per cent respectively.

Noting that more HDB owners may be tempted to put up their flats for rent, Huttons’ Yip estimates HDB rental prices to increase between 10 to 15 per cent this year.

Overall, HDB rentals grew 27.5 per cent year on year, with rents in mature estates and non-mature estates increasing by 26.4 and 28.7 per cent respectively. All room types recorded on-year rent increases with three-room rentals growing 24.5 per cent, four-roomers by 28.2 per cent, five-roomers by 29.5 per cent and executive rents by 31.1 per cent.

Volumes for the HDB rental market were up 12.2 per cent from the month before, with an estimated 2,819 units rented in January compared with some 2,513 units in December.

Pow Ying Khuan, head of research at 99 Group, noted that while HDB rental volumes rebounded, they were still 5.9 per cent lower than the five-year average volume for the month of January.

The volumes were also down 16.1 per cent year on year from the previous year.

By room type, 31.6 per cent of January’s volumes were from three-room flats, while 38.5 and 24.9 per cent came from four and five-room units respectively. Executive flats contributed to 5.1 per cent of the month’s volumes.

Commenting on the overall increase in rental prices for both the condo and HDB markets, OrangeTee senior vice-president of research and analytics Christine Sun said: “Growth has slowed down probably because rents have already run up quite significantly over the past year.”

Sun anticipates that rental growth will remain moderate as more condos and BTO flats will be completed this year, which will free up some housing stock in the market.

“China’s reopening of its international borders and expatriates returning from other countries will help to absorb some of the excess housing inventory, thus mitigating a steep rental fall,” Sun added.

ERA Realty head of research and consultancy Nicholas Mak also said the slower rate of rental growth in January 2023 could signal that rental rates are reaching their peak this year.

Mak nonetheless estimates the housing rental index to increase by 10 to 15 per cent year on year in 2023.

“This may be cold comfort for some tenants to learn that the rental rates could still increase this year, albeit at a slower rate,” Mak said.