Residential property rents climb in October; condo volumes down: SRX, 99.co

CONDOMINIUM and Housing and Development Board (HDB) rental prices continued to rise in October despite a significant decrease in condo rental volumes, according to flash estimates from SRX and 99.co released Wednesday (Nov 9). 

Rents for the condo market climbed 2.7 per cent from September to mark the 22nd consecutive month of growth, led by a 3.2 per cent month-on-month increase in the Rest of Central Region (RCR). Rentals for the Core Central Region (CCR) and Outside Central Region (OCR) also rose on month by 2.1 per cent and 2.6 per cent, respectively.

Year on year, overall rental prices for condominiums grew by 32.7 per cent with rents in the CCR, RCR and OCR increasing by 31.1 per cent, 34.2 per cent and 32.6 per cent, respectively.

Condo rental volumes however fell 8.7 per cent from that of September, with an estimated 4,355 units rented in October compared with an estimated 4,771 units rented previously. This represents a 13.9 per cent year-on-year volume decline.

Pow Ying Khuan, head of research at 99 Group, said a likely explanation for the lower volumes could be a lack of supply in the market.

“Due to pandemic-led construction delays, fewer new homes have been completed and are available for rent,” he noted.

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Breaking it down by region, 39 per cent of October’s volumes were from the OCR, while 35.3 per cent were from the RCR and 25.7 per cent came from the CCR.

Meanwhile, HDB rents for October increased by 1.8 per cent from the previous month, with mature and non-mature estate rents rising by 1.6 per cent and 2.1 per cent respectively.

Although rents for three-room HDB units fell by 1 per cent from the previous month, executive and four-room rents more than offset the decrease, rising 6.1 per cent and 4.4 per cent, respectively. Rental prices for five-room units were up by a marginal 0.3 per cent.

Overall, HDB rentals grew 26.6 per cent on a year-on-year basis, with rents in mature estates and non-mature estates increasing by 25.7 per cent and 27.4 per cent, respectively. All room types recorded on-year rent increases with three-room rentals growing 22.5 per cent, four-roomers by 28.2 per cent, five-roomers by 27.6 per cent and executive rents by 30.6 per cent.

99 Group’s Pow attributes October’s rental price growth for both the condominium and HDB markets to cooling measures that took effect from Sep 30 – particularly the recently mandated 15-month wait for private property owners (PPOs) who have sold their properties before they are allowed to buy a non-subsidised resale HDB flat.

“With the 15-month wait it was expected that this would have a spillover effect on the rental market, as more PPOs would rent in the meantime,” he explained, although he added that it may “take a couple of months” before the full effect of this can be seen.

Volumes for the HDB rental market were up 10.3 per cent from the previous month, with an estimated 1,995 units rented in October compared with some 1,809 units in September. This was 6 per cent higher than the five-year average volume for the month of October, and represents a 7.5 per cent year-on-year increase from the previous year.

By room type, 35.1 per cent of October’s volumes were from three-room flats, while 37.4 per cent and 21.7 per cent came from four and five-room units, respectively. Executive flats contributed to 5.8 per cent of the months’ volumes.

Noting that four-room HDB and executive flats have seen the highest increase in rent over the past year, Pow said the “huge increase” in rentals for executive flats points to surging demand for more space.

“With increasing rents, tenants may also turn to HDB instead of condos to get cheaper rent, leading to higher rents and volume in the HDB rental market,” he added.  

Commenting on the overall surge in rental prices for both condo and HDB markets, OrangeTee & Tie chief executive Steven Tan said landlords may have upped their prices in line with expected interest rates hikes and growing inflation.

“With an overall tight housing situation, renters may have no choice but to accept the increase in rents. In light of the future increase in GST (goods and services tax), property tax, and interest rates, we anticipate rental prices to continue climbing as landlords continue to pass on the increase in costs to their tenants,” said Tan.

This steep uptrend may however begin to abate next year, he added, as more condos are due to finish construction by 2023 and add to the rental pool.

Like 99 Group’s Pow, Tan is expecting rental demand to remain resilient partially due to the 15-month wait-out period for PPOs.

“Couples waiting for their homes to be completed would also have to continue renting if they do not wish to stay with their families in the meantime,” he added.

Noting that leasing activities remain at a “brisk pace” in October with multiple tenants showing up for viewings, Huttons chief executive Mark Yip said the “landlord’s market” is likely to continue throughout all of 2022.

Yip foresees a 5 per cent increase in rents for the last two months of 2022. Contrary to the views of OrangeTee & Tie’s Tan, he sees a further uplift to the strong run-up in rents in 2023 in the wake of cooling measures.