Condo, HDB rents climb in Nov; leasing volumes drop as tenants feel the pinch

November marks the 23rd straight month of growth for condo rents and the 29th for HDB rents. ST PHOTO: LIM YAOHUI

SINGAPORE – Rents for Housing Board flats and private apartments continued to climb in November, with analysts noting that tenants are feeling the pinch in this landlords’ market.

HDB rents rose by 1.6 per cent in November, compared with October’s 1.8 per cent, with rents across all flat types in both mature and non-mature estates climbing, according to flash figures released on Wednesday by property portals and SRX.

Condominium rents went up by 2 per cent in November, a slower pace compared with 2.7 per cent in October, with those in the suburbs growing at the fastest pace at 3.4 per cent.

This marks the 23rd straight month of growth for condo rents and the 29th for HDB rents.

ERA Realty’s head of research and consultancy Nicholas Mak said: “The unrelenting increase in residential rental rates is fuelled by strong demand from expatriates and some local tenants, as well as limited new housing supply due to the delayed completion of new HDB and condo projects. “

Compared with November 2021, condo rents have surged by 34 per cent, with rents in the suburbs up by 36.5 per cent.

Huttons Asia chief executive Mark Yip said more tenants were priced out of the city fringe and core central Singapore market. “These tenants were displaced to the suburbs, thus pushing up the rents in November,” he said.

HDB rents are 27.8 per cent higher compared with November 2021, with executive flats lodging a 31.4 per cent jump.

The double-digit year-on-year growth began in the fourth quarter of 2021, noted Mr Mak.

“That was when confidence recovered in the job and property markets, as many people felt that the pandemic was gradually being brought under control,” he said.

“However, many tenants are already feeling the pain from the rapid rental hikes in the past year.”

Meanwhile, condo rental volume dipped for the fifth straight month, falling by 4.5 per cent to an estimated 4,160 units in November.

The number of units leased was down by 16.5 per cent year on year, 7.2 per cent lower than the five-year average for the month of November.

Fewer HDB flats were leased in November, falling by 15.2 per cent to an estimated 1,691 units, reversing the increase in October.

Rental volumes in the HDB market dropped by 10 per cent year on year, and were 10.9 per cent lower than the five-year average for the month of November.

OrangeTee & Tie senior vice-president of research and analytics Christine Sun said rental demand has been contracting due to escalating rents and declining rental stock. “Tenants are signing longer leases, which will progressively lead to fewer homes available for rent,” she said.

A seasonal slowdown during the holiday period may have caused leasing transactions to dip, as there were fewer house viewings, she added.

Mr Yip noted that there were more renewals of leases for condos than new leases in November, dampening condo rental transactions.

The drop in the HDB market could be due to more Malaysians not renewing their leases and going back to commuting daily across the Causeway, he added.

Ms Sun said fewer flats will reach their minimum occupation period in 2023, which may result in fewer homes being put up for lease.

But Mr Mak noted that there could be some relief for condo tenants, as about 18,200 private residential units are expected to be completed in 2023, double the number in 2022.

Mr Yip said less upbeat economic conditions in 2023 will likely slow down hiring in some sectors, which may reduce rental demand.

Prices, however, may rise as the increase in property tax could result in landlords passing on some of the costs to tenants, he added.

Mr Mak expects the steady leasing demand to drive rental rates higher in 2023, but at a slower pace compared with 2022 due to economic headwinds.

“The high rental rates could be the market’s worst enemy as they gradually reduce demand. Hence, rental rates could stabilise in late 2023 or early 2024, and could start to correct after that,” he added.

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