Smaller dip in private home rents suggests likely pick-up

SRX Property's resale price index for private non-landed homes rose 6.2 per cent in 2017 while its resale price index for HDB flats slipped 1.8 per cent.
SRX Property's resale price index for private non-landed homes rose 6.2 per cent in 2017 while its resale price index for HDB flats slipped 1.8 per cent.PHOTO: ST FILE

Home rents stayed sluggish last month but, at least, the full-year decline in 2017 was more moderate than in 2016, indicating a pick-up later this year.

Rents of private non-landed homes slipped 0.3 per cent in December from November, bringing the full-year decline to 0.5 per cent.

HDB rents registered a 0.6 per cent fall in December from November, bringing the full-year decline to 3.5 per cent.

These figures are flash estimates from SRX Property, which supplements property transactions data from the Government with pre-caveat transactions from 14 major real estate agencies.

The full-year declines were more moderate than the 5.9 per cent drop in private non-landed rents and the 3.9 per cent dip in HDB rents in 2016.

This continued rental slide coincided with a recovery in private home prices.

SRX Property's resale price index for private non-landed homes rose 6.2 per cent in 2017 while its resale price index for HDB flats slipped 1.8 per cent.

Official flash estimates from government agencies showed private home prices appreciating by 1 per cent in 2017, thanks to a recovery in the second half of the year, while HDB resale prices skidded 1.5 per cent over the 12 months.

The seasonally slow month of December also saw fewer rental transactions. An estimated 1,414 HDB flats were rented in the month, a 23.1 per cent fall from November and a 21.2 per cent drop from a year earlier.

Also, 3,188 private non-landed units were rented in December, 20.2 per cent down from November and 15.3 per cent lower than the same month in 2016.

Consultants expect the rental market to improve from the second half of this year onwards. Knight Frank's head of consultancy and research Alice Tan said private home rents could rally as new completed supply tapers off while the workforce may expand on the back of better economic prospects.

She expects overall private home rents - including landed and non-landed homes - to register a marginal rise of 1 to 3 per cent by the fourth quarter of the year.

ZACD Group executive director Nicholas Mak believes the market will be able to absorb the upcoming supply of newly completed homes. This is forecast to be up to 14,600 units for 2018 and 2019.

"On average, the future annual supply is about 8,300 units per year. This forms less than half of the annual supply of newly completed homes in the five-year period from 2013 to 2017," Mr Mak said.

He forecasts rents for private homes will fall 1 to 2 per cent while those for HDB flats will be down 3 to 4 per cent this year.

Though vacancy rates have fallen from the last peak of 8.9 per cent in the second quarter of 2016, they remained relatively elevated at 8.4 per cent as at the third quarter last year, compared with the average of about 6.5 per cent in the past decade.

A version of this article appeared in the print edition of The Straits Times on January 11, 2018, with the headline 'Smaller dip in private home rents suggests likely pick-up'. Print Edition | Subscribe