In a weak rental market, Housing Board flats have proved to be slightly more resilient than private apartments. Rents for HDB flats rose 0.7 per cent last month from December, compared with a 0.2 per cent rise for private apartments, according to flash estimates from SRX Property yesterday.
Year on year, rents for HDB flats fell 3.1 per cent. For private units, the drop was a heftier 5.5 per cent.
One reason could be that HDB flat rents are generally priced within a limited range, with about 90 per cent of leases signed at between $2,000 and $2,600 per month, said PropNex CEO Mohamed Ismail Gafoor.
On the other hand, private property rents have a much wider spread. On top of that, the private market is facing a deluge of supply - 18,971 private homes were completed last year and another 21,906 will come on stream this year.
"Today's tenants are much more choosy. During renewal, most existing tenants will offer slightly lower rents, especially if they entered the market about two years ago when sentiments were more positive," said Mr Ismail.
For example, a person who signed a lease for $3,500 a month two years ago could be offering about $3,000 a month now, or nearly 15 per cent lower. This amount can fetch a three-bedroom condo unit in the suburbs, or a small two-bedroom condo unit in the city fringes.
Still, the overall rental market will continue to suffer the brunt of the tight foreign worker policy this year. Rental volume for HDB flats fell 5.4 per cent from December to 1,670 units last month. This was 17.7 per cent lower than in January last year. Rental volume for private apartments rose 15 per cent from December to 3,411, or 1.2 per cent lower than in January last year.