CONDOMINIUM rental prices and volumes continued to fall in November, marking the fourth consecutive month of decline. The Housing and Development Board (HDB) rental market, however, showed signs of a slight recovery.

Based on flash data from SRX and 99.co released on Wednesday (Dec 27), condo rental prices dropped 1.4 per cent from the previous month, led by a fall in rents in both the Core Central Region (CCR) and Rest of Central Region (RCR).

Outside Central Region (OCR) rents remained unchanged.

Year on year, overall rents were still 6.3 per cent higher than November 2022 levels, with rents in the CCR growing 5 per cent, and 6.4 per cent in the RCR. OCR rents were up 7.7 per cent.

Mark Yip, chief executive of Huttons Asia, noted that condo rental prices for November represented the steepest decline since May 2020. He attributed this to landlords who adjusted their expectations for rents in the face of increased supply and waning demand.

“Rents of private condos in December 2023 will remain soft, making it the first year since the pandemic that rents will stay flat.” 

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Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, said rental price growth in the private residential market may continue to moderate in 2024 at around 2 to 5 per cent.

This would be “remarkably slower” than the 29.7 per cent in 2022, and the 12 to 14 per cent range forecast for 2023, she added.

November’s condo leasing volumes declined as well, falling 8.4 per cent month on month to an estimated 4,950 units rented, compared with 5,402 units in October. This was 1.5 per cent lower on a year-on-year basis, and down 12 per cent from the five-year average volume for the month of November.

The OCR accounted for 36.6 per cent of total volumes for the month, followed by 32 per cent from the RCR and 31.3 per cent from the CCR.

The decline in rental volumes for condos came as more tenants move to more affordable accommodations such as HDB flats, said Yip of Huttons.

“We expect lower volumes to persist towards the end of the year as the holiday season approaches, but pick up again in Q1 of 2024,” said 99.co’s chief data and analytics officer Luqman Hakim. 

ERA Singapore’s key executive officer Eugene Lim also foresees “stickier” private residential rents for the first quarter of 2024.

“Annual values and property taxes are set to rise in 2024, and landlords will find themselves bearing the brunt of the increase amid a softer rental market. This could mean stickier rents in Q1 2024, as some landlords who have strong holding power could hesitate to compromise on rents despite a softer market.” 

The HDB rental market fared comparatively better in November 2023, with prices increasing 0.8 per cent from the previous month after a slight dip in October. Rents for mature estates increased by 1 per cent on the month, and 0.6 per cent for non-mature estates.

All room types recorded rent increases, with executive flat rentals increasing 1.7 per cent, followed by four-room flats (0.9 per cent), five-roomers (0.7 per cent) and three-roomers (0.4 per cent).

On a year-on-year basis, overall rents in the HDB leasing market were up 12 per cent, with mature estate rents growing 11.2 per cent, and 13 per cent for non-mature estates.

Five-room flats booked the largest rent increases on the year at 14.1 per cent, followed by executive flats (12.9 per cent), four-roomers (12.6 per cent) and three-roomers (9.7 per cent).

Leasing volumes in the HDB space in November were down from the previous month, falling 5.7 per cent to 2,693 units rented from 2,856 in October.

This was, however, 0.3 per cent higher than the five-year average volume for the month of November, and up 10 per cent from November 2022.

By room type, 37.7 per cent of HDB rental volumes were from four-room flats, followed by 33.4 per cent from three-roomers, 22.8 per cent from five-roomers and 6.2 per cent from executive units.

Industry watchers were mixed on the outlook for the HDB rental market, with ERA forecasting average rents to grow by up to 10 per cent in 2024.

“HDB rentals remain an affordable choice for housing in Singapore, and the temporary relaxation of occupancy cap could benefit S Pass holders and work permit holders the most. As a result, this allows more tenants in a single rental flat, helping tenants to offset their rental cost,” said ERA’s Lim.

While Sun of OrangeTee & Tie is anticipating a continued decline in HDB stock, she does not foresee a jump in rental growth in the coming year despite the tighter housing market. This is because affordability will continue to be a key concern among tenants, in her view.

Huttons’ Yip is likewise expecting HDB rents to stay flat in December 2023, with rents for the full year to book an increase of between 9 and 10 per cent.

“The change in occupancy rate for larger condo and HDB flats from January 2024 may see a drop in demand as tenants may move from smaller to larger units. Rents of larger units may increase, while the smaller ones may face some pressure,” he noted.