Rents of private apartments and Housing Board flats both fell last month from September, but cheaper HDB rents should keep demand robust over coming months.
Private apartment rents fell an estimated 0.4 per cent month on month after declining 0.3 per cent in September, according to SRX Property data out yesterday.
They are now 5.7 per cent lower than a year back and 13.7 per cent below the January 2013 recent peak.
This was well within expectations and due to rising home completions, said R'ST Research director Ong Kah Seng. A total of 13,150 private homes were completed in 2013; rising to 19,941 last year and a projected 18,977 homes for the whole of this year.
"Tenants who recently are renewing their one-year leases are being offered similar rents, or reductions of 5 per cent or more. Those renewing a two-year lease are being offered a 5 to 12 per cent rental reduction," he said.
Compared with October last year, private apartment rents in the core central region have fallen 2.9 per cent. Rents are down 3.5 per cent on the city fringes and down 8.3 per cent in the suburbs, where most of the new supply is coming onstream.
Rental volume for private apartments fell 2.7 per cent to about 3,448 private apartments, in line with a seasonal slowdown towards the end of the year.
On the HDB front, rents fell 0.5 per cent month on month. Rents were previously estimated to be unchanged in September but this was revised to a 0.1 per cent fall. HDB rents are now down 3.3 per cent from a year back and 7.2 per cent below its recent peak in August 2013.
HDB rental volume fell 3 per cent to an estimated 1,602 units last month. But the HDB rental market is relatively more stable as support is coming from expatriates who are increasingly seeking HDB units, said ERA Realty key executive officer Eugene Lim.
"They no longer have a separate budget for housing... Rental demand for HDB flats is quite strong, especially for the $2,500 and below segment."
Thus, while the large supply of mass market condos should push such rents down and, therefore, also put pressure on HDB rents, many will still prefer the more affordable HDB rents, he noted.
For example, a family with a monthly housing budget of less than $3,000 may want a three-bedroom unit. Looking at the West Coast area, such condo units would start from about $3,500; but they could rent a five-bedroom HDB in the area for about $2,500 to $2,800 monthly.
Thanks to such demand, HDB rents have moderated to a lesser degree. "There is a certain baseline for HDB rents, where they should not go down further," he said.