Leasing market still weak but may stabilise next year

Rents of Housing Board flats slipped 0.6 per cent from May to June, after rising by a revised 0.8 per cent from April to May.
Rents of Housing Board flats slipped 0.6 per cent from May to June, after rising by a revised 0.8 per cent from April to May.ST PHOTO: KUA CHEE SIONG

Tenants are still calling the shots for private condominiums and Housing Board flats, with rents staying flat and lease numbers falling.

At first glance, there was good news for landlords, with private condo rents rising 0.5 per cent from May to June. That reversed the revised 0.6 per cent decline from April to May, but they are down 3.2 per cent on June last year, according to SRX Property estimates yesterday.

International Property Advisor chief executive Ku Swee Yong said: "The increase could be a blip. We still see more property completions adding to the leasing market, and owners are still having difficulty getting tenants."

The rent increases last month were led by the city fringe, where rents rose 1.4 per cent from May.

They increased 0.5 per cent in the suburbs, but those in prime condos in the core central region posted a 0.4 per cent drop last month.

Fewer signed leases also point to the fragile market. There were 4,250 condo units leased last month, down 8.8 per cent on the 4,661 rented in May. However, analysts expect more leases will be signed in coming months following a recent policy change that cut the minimum rental period for private homes from six months to three.

HDB rents slipped 0.6 per cent from May to June, after rising by a revised 0.8 per cent from April to May. SRX said rents were down by 4 per cent from June last year.

There were 1,704 HDB units leased in June, a fall of 5.5 per cent from 1,804 in May and down 11.5 per cent from June last year.

"I think private rents are likely to decline by 3 per cent for the whole of 2017 and HDB rents to drop by about 2 per cent," said Dr Lee Nai Jia, head of research at Edmund Tie & Company. However, analysts say the outlook has improved as rents are declining at a slower pace.

Said OrangeTee head of research and consultancy Wong Xian Yang: "The leasing market could potentially stabilise in 2018, as only 9,014 private residential units are expected to be completed in that year.

"This represents a year-on-year drop of 42.3 per cent from 2017."

A version of this article appeared in the print edition of The Straits Times on July 13, 2017, with the headline 'Leasing market still weak but may stabilise next year'. Print Edition | Subscribe