The volume of private apartments and Housing Board flats rented may have bottomed out in the second month of the circuit breaker, but rents could continue to weaken, market observers said in response to flash data released by real estate portal SRX Property yesterday.
The number of non-landed private homes leased rose by 1 per cent to 2,881 units last month from 2,853 in April, SRX data showed.
Last month's rental volume for these private flats was still 45.7 per cent lower than a year ago, and 38.8 per cent off the five-year average volume for the month.
In the HDB rental market, the number of flats leased fell 4.2 per cent to 1,147 last month, from 1,197 in April.
HDB rental volumes last month were down by 45.1 per cent from a year ago. They were also 42 per cent lower than the five-year average volume for the month.
Of those leased in May, 35.3 per cent were four-room flats, 33.5 per cent were three-room units, 25.8 per cent were five-room units, and 5.4 per cent were executive flats.
The low leasing numbers are the result of the circuit breaker in April and May, which put a lid on the transaction volume in both the HDB and private residential leasing markets, said ERA Realty head of research and consultancy Nicholas Mak.
Still, transactions continued to be inked even though prospective tenants could not view the properties offered for lease in person, he noted. "This is because, compared with property buyers, tenants are open to leasing properties through viewing photos and video clips of the properties on leasing websites, as most leases are only for one to two years."
He added: "The cost of renting an unsuitable property is lighter than buying an unsuitable property. If the tenant does not like the property, he could move to another property at the end of the lease."
In the private rental market, rents last month dipped 1.4 per cent from April.
"Landlords were probably more eager to secure tenants for their properties in this uncertain period even if it meant lowering the rentals," said Mr Mak.
Year on year, private rents last month were at the level they were in May last year, but are down 17.3 per cent from their peak in January 2013.
For the HDB rental market, SRX data shows rents last month fell by 1.3 per cent from April.
Year on year, HDB rents fell by 0.8 per cent and were down 15.6 per cent from their peak in August 2013.
Looking ahead, Ms Christine Sun, Orange Tee & Tie's head of research and consultancy, said: "The rental situation may improve when travel restrictions are gradually eased and house viewings permitted as our economy continues to reopen.
"That said, the rental market may face some challenges ahead as the hiring outlook is increasingly cautious amid the growing economic headwinds."
Mr Mak said that with continued restrictions on the viewing of properties, the leasing transaction volume this month is likely to remain at about the same level as in April and May.
When the restrictions are lifted, rental volume will jump as some tenants may be waiting to move to another home, he added.
Yet, some leasing demand could be lost as some foreigners become jobless and leave Singapore. Mr Mak consequently predicts that leasing demand this year for both private apartments and HDB flats could drop by 2 per cent to 4 per cent.