Private home rents unchanged in Q3 after long decline

The landed property segment helped bolster the rental market in the third quarter and arrest a decline that has lasted for 15 quarters.

But vacancy rates for private homes also rose islandwide, on the back of more completed homes on the market.

The rental story may provide landlords with a little cheer: After an overall 0.2 per cent quarter-on-quarter slide in the second quarter, rents stayed unchanged in the following three months with the help of a 0.6 per cent growth among landed properties.

But condominium and private apartment rents fell 0.1 per cent, to follow the 0.2 per cent decline in the second quarter.

JLL national director of research and consultancy Ong Teck Hui said: "Some owners have withdrawn their units from the leasing market, prompted by the turnaround in prices in the sales market.

"This could have reduced leasing options for some tenants and have a positive impact on rents."

Still, the cheer was spread unevenly across the island.

Rentals for apartments in the core central region dropped by 0.8 per cent in the third quarter, after notching a 0.1 per cent gain the previous quarter.

Unit rents outside the central region slid by 0.3 per cent, compounding the second-quarter decline of 0.6 per cent.

It was better news for non-landed private homes in the rest of the central region, where rents rose 0.9 per cent against a drop of 0.4 per cent in the previous quarter.

ZACD Group executive director Nicholas Mak noted that one storm cloud on the horizon could be the decrease in Singapore's non-resident population, which has fallen for the first time in 14 years.

Non-residents such as foreign workers and students "are the main drivers of the leasing demand for both public and private housing", he said, and a decline in this population would weaken the rental market.

Meanwhile, the private home vacancy rate - executive condominiums (ECs) excluded - ticked up to 8.4 per cent in the third quarter, from 8.1 per cent in the second.

"However, this is not at the alarming level yet," said Mr Mak, remarking that vacancies hit 9.7 per cent in 1998 during the Asian financial crisis.

A Morgan Stanley report yesterday also said that "unsold inventories and vacancies remain low", as the latest vacancy rate is still 0.3 percentage points lower than a year ago.

The stock of completed private homes, not counting ECs, increased by 3,974 units in the third quarter, compared with the addition of 3,806 units in the previous quarter.

Mr Eugene Lim, key executive officer at ERA Realty Network, said "a recovery in the rental market could possibly happen as soon as 2018", as the number of homes set to be finished next year is less than half the more than 16,000 that became ready this year.

Annabeth Leow

A version of this article appeared in the print edition of The Straits Times on October 28, 2017, with the headline 'Private home rents unchanged in Q3 after long decline'. Print Edition | Subscribe