HDB, condo rents continue to climb in July, with more units leased

SINGAPORE - Rents for Housing Board flats rose for the 37th straight month in July, climbing by 2 per cent,

after a 1.4 per cent increase in June.

On the whole, public housing rents went up by 24.1 per cent between July 2022 and July 2023, based on flash data from real estate portals 99.co and Singapore Real Estate Exchange (SRX) released on Wednesday.

Separately, condominium rents headed north in July for the second consecutive month, rising 1.1 per cent, after a 0.2 per cent climb in June. Year on year, rents climbed by 21.6 per cent.

Rental volumes also rose in July.

The number of HDB units being rented increased by 11 per cent, compared with June.

An estimated 3,320 HDB flats were being rented in July, up from 2,990 in June. This is the highest HDB rental volume recorded since August 2022, noted 99.co’s chief data and analytics officer Luqman Hakim.

On the condominium front, rental volumes surged 25.3 per cent in July from June.

There were an estimated 7,282 condominium units leased in July, compared with 5,810 in June.

These figures are in step with analysts’ expectations that the rental market would gather speed in the third quarter. The highest rental volumes are typically recorded between July and September. 

They said the rise in HDB rents and volumes was a sign that tenants were gravitating towards cheaper housing options amid looming economic uncertainty and higher retrenchment levels in the first half of 2023.

Mr Eugene Lim, key executive officer of property agency ERA Realty Network, said: “Apart from relocating from more centrally located condominiums to suburban condominiums, some tenants are also renting HDB flats instead, as rents for flats are relatively more affordable compared with private condominiums.”

Mr Luqman from 99.co is of the view that HDB rents had gone up as landlords capitalised on the rental gap between public housing flats and condominium units.

This was borne out by the 4 per cent rise in rents for HDB executive flats, compared with gentler increases of 1.4 per cent for three-room flats, 2.4 per cent for four-room units, and 1.9 per cent for five-room flats.

The figures, added Mr Luqman, confirmed that some tenants who were searching for condominium units had switched to renting executive flats, which fetch lower rents.

Mr Mark Yip, chief executive of property firm Huttons, said some buyers of recently launched condominium units could have sold their HDB flats and rented other flats in the interim to avoid paying higher additional stamp duties.

Since end-April, citizens buying their second residential property have had to contend with additional stamp duties of 20 per cent, up from 17 per cent.

When it comes to condominiums, Mr Lim from ERA said an increasing share of tenants had relocated to the suburbs because of a disparity in rental expectations between them and their landlords.

In particular, higher rents for units in the prime districts have deterred tenants.

On average, it cost $6,600 a month to rent a 1,000 sq ft to 1,500 sq ft unit in the prime area in July, compared with $5,500 for a similar-sized unit on the city fringes and $4,800 for one in the suburbs, he noted.

Based on 99.co and SRX’s report, the suburbs had the dominant share of condominium rental volume in July, at 37.4 per cent. This was followed by the city fringes (34.3 per cent) and the prime districts (28.3 per cent).

Condominium rents in the suburbs rose by 1.6 per cent, while rates on the city fringes climbed by 1.1 per cent and those in the prime area edged up by 0.7 per cent. 

Mr Yip of Huttons said demand for condominium units in the suburbs might have risen owing to an influx of students enrolling in nearby international schools. For instance, units at Skies Miltonia and The Miltonia Residences recorded increased rental demand because of their proximity to XCL World Academy in Yishun.

That said, Mr Nicholas Mak, chief research officer of property portal Mogul.sg, predicts the growth in condominium rents could begin to ease in the second half of 2024.

That is because about 23,400 private housing units are due for completion in the second half of 2023 and in 2024.