Condo, HDB rents continue surge in May but volumes down year on year: SRX, 99.co

RESIDENTIAL property rentals maintained their upward trend in May, climbing month on month in terms of both rental prices and volumes for condominium and HDB (Housing Board) units alike.

Huttons Asia’s Mark Yip attributes May’s robust gains to a “much stronger-than-expected” return of foreign employment, which pushed up rental demand for both private condos and HDB flats.

The chief executive does not foresee tight rental market easing any time in 2022, with rents expected to increase in the months ahead.

“Some expatriates are asking their companies to provide more housing allowance to offset the relentless climb in rents. This will add to the costs of doing business in Singapore and may affect the attractiveness of the Republic in the long run,” said Yip. 

He also foresees a potential increase in demand from foreign students for housing as the new school term starts.

According to the latest flash figures from SRX Property and 99.co released on Wednesday (Jun 15), condo rental prices climbed for the 17th consecutive month to gain 2.8 per cent from April 2022, and 18.1 per cent on year.

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By region, the outside central region (OCR) saw the largest month-on-month percentage climb of 3.3 per cent, followed by the rest of the central region (RCR) and core central region (CCR) at 2.8 per cent and 2.2 per cent, respectively.

Rents in the OCR, RCR and CCR grew on a year-on-year basis by 19.7 per cent, 18.6 per cent and 15.4 per cent, respectively.

While overall condo rental volumes grew 11.7 per cent to 4,185 units as compared with the 3,748 units rented the previous month, this was still 23.7 per cent lower when compared with the year before. They were also down 13.2 per cent from the 5-year average volume for the month of May.

A majority 41.1 per cent of total volumes are from the OCR, with 31.9 per cent from the RCR and 27 per cent from the CCR.

Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, is expecting more private rental tenants to opt for either smaller units or those located away from the city centre, in view of the rising prices and inflationary pressures.

She sees potential for continued robust demand in the suburbs, where private homes tend to come with cheaper rents. Rents in the OCR may also trend higher in the coming months, in her view. 

Within the HDB segment, rents for May 2022 rose 2.4 per cent from April 2022 and 16.2 per cent year on year, with increases across both mature and non-mature estates and all room types.

May HDB rental prices within mature estates grew 1.8 per cent from the previous month, and 14.4 per cent when compared with a year ago – while rentals in non-mature estates increased by 3.1 per cent from April 2022, and 18.1 per cent from May 2021.

Five-room HDB flats saw the largest on-month rental hike of 3.3 per cent, which SRX and 99.co highlighted as an indication of tenants’ preference for bigger spaces.

Rents for 3-room, 4-room and executive flats booked increases of 2.1 per cent, 1.9 per cent and 1.6 per cent respectively.

On a yearly basis, 3-room, 4-room, 5-room and executive flat rents advanced 15.4 per cent, 15.6 per cent, 18 per cent and 11.4 per cent, respectively.

HDB rental volumes increased 8.4 per cent to an estimated 1,617 units rented in May 2022 from 1,492 units in April 2022. This was however 17.3 per cent lower when compared with the previous year, and 12.4 per cent down from the 5-year average volume for May.

Three-room, 4-room, 5-room and executive flats contributed to 35.3 per cent, 37.8 per cent, 22 per cent and 4.9 per cent of total HDB rental volumes in May, respectively.

ERA Singapore’s head of research and consultancy Nicholas Mak views the lower rental volumes for both condo and HDB properties as an indication of weaker leasing demand from local residents as they return to work in the office. 

“However, the rental vacancies left by the locals will gradually be filled by the new expatriates arriving in Singapore. The rate of rental growth would also slow down in the coming months as more housing supply enters the market,” he said. 

Commenting on the latest May figures, SRX Property and 99.co believe the recent hike in additional buyers’ stamp duty for foreigners buying their first property in Singapore may have encouraged them to rent first or extend their existing tenancies instead.

In their view, foreigners may be more inclined to move to Singapore for the short to medium term given Singapore’s recent reopening for international flights amid the current geopolitical situation.

“Some of these foreigners could have already been working in Singapore during the pandemic. Because of travel restrictions in their home countries, they may choose to extend their tenancy and working contract in Singapore - it is also possible that some of them may choose to move from renting in the CCR and RCR to the OCR to lock in lower rental prices given the increasing rent (or for larger spaces),” they added.

Going forward, SRX and 99.co believe OCR estates as well as non-mature estates - particularly the ones closer to the border, industrial estates and business parks - are poised for increased rental demand as the borders between Malaysia and Singapore reopen.

Noting the recent trend of younger couples and singles who moved out of their family homes amid Covid-19, the agencies believe many prefer to continue renting as it would give them greater freedom and flexibility in how they can utilise their space.

“Finally, there may also be a proportion of BTO (Build-to-Order) applicants who were affected by construction delays and decided to rent near their neighbourhoods of choice. Reasons can range from family planning to being closer to their primary schools of choice before moving into their BTO flats once they are ready,” said SRX and 99.co. 

OrangeTee & Tie’s Sun further underscored a possibility of longer lease periods contributing to the robust rental figures in recent months. 

“As housing stock is limited and rental demand is still surging, many tenants are taking up a more extended lease period to get better rental rates or concessions. Many are signing 2-year contracts to lock in a lower rate now. Others are accepting longer leases in order to secure a unit of their choice since landlords are usually keener to take in tenants who are willing to sign longer leases,” added Sun.