HDB rents rise 0.1% in August, lowest in almost 2 years; condo rents down 1%

SINGAPORE - Rents for Housing Board flats inched up by 0.1 per cent in August, the lowest increase in nearly two years, with analysts noting that this could be a sign of a potential slowdown in HDB rents.

Meanwhile, rents for condominium units dipped by 1 per cent in August, based on flash data released on Wednesday by real estate portals 99.co and Singapore Real Estate Exchange (SRX). This could be an indication that condo rents are approaching their ceiling, said analysts.

Despite signs of stabilisation, rents in the public and private housing markets are still considerably higher on a year-on-year basis. HDB rents rose by 20.8 per cent in August compared with a year before, while condo rents climbed by 17.3 per cent in the same period.

The 0.1 per cent rise in HDB rents in August is the lowest since October 2021, when they went up by 0.2 per cent.

Fewer HDB flats were leased out in August. An estimated 2,997 flats were rented out in August, down from July’s 3,334 units. This is, however, a 16.9 per cent year-on-year increase from August 2022.

Condo rental volumes also dipped in August with an estimated 6,730 units leased out, compared with 7,287 units in July. It was a decline of 7.6 per cent, and on a year-on-year basis, it dropped 10.3 per cent.

Property analysts cited factors such as waning rental demand and an increased supply of new homes as reasons for the slowdown in HDB rental prices and dip in condo rents.

Mr Eugene Lim, key executive officer of property firm ERA Realty, attributed the slowdown in the pace of HDB rental increases to the completion of 20,000 Build-To-Order units in 2022 and another 40,000 units slated for 2023.

“This can alleviate the demand for rental units, as more people collect the keys for their new homes,” he said. “As HDB rental demand starts to ease, this could put downward pressure on HDB rental prices.”

Mr Mark Yip, chief executive of real estate agency Huttons Asia, said there were fewer condo launches during the Hungry Ghost month that began on Aug 16, and thus lower HDB rental demand from flat upgraders. These home owners sell their flats first and rent other HDB units to avoid paying

additional stamp duties

imposed on the purchase of second or subsequent properties.

Still, Mr Lim said the year-on-year growth in HDB rental transactions indicates that these flats are still viable alternatives for tenants who are priced out of the condo market.

In August, rents for three-room flats climbed by 0.7 per cent, while those for five-room units rose by 0.5 per cent, 99.co and SRX flash data showed. Rents for executive flats dropped by 1.5 per cent, and those for four-room flats dipped by 0.3 per cent.

On condo rents, Ms Christine Sun, senior vice-president for research and analytics at real estate firm OrangeTee & Tie, said the market is showing signs of stabilisation. Rents climbed by a marginal 0.3 per cent from February to August, she said.

Mr Yip said condo rents came under pressure in August amid intensifying competition for tenants due to a growth in the supply of newly completed projects such as Normanton Park in Queenstown. He also cited slowing employment growth and a rising trend towards overseas relocation for remote work as other factors affecting condo rents.

99.co and SRX flash data showed that condo rents in the prime area dropped by 1.7 per cent in August, while rents for units on the city fringe decreased by 0.7 per cent and those in the suburbs dipped by 0.5 per cent.

Analysts predict HDB and condo rents could remain stable for the rest of 2023.

99.co chief data and analytics officer Luqman Hakim said the HDB rental market was “on the cusp of a possible rental price cooling”, given the slower pace of growth in August.

Ms Sun said there would, however, always be demand for HDB flats as they have the most affordable rents, so the public housing rental market may continue outperforming the condo rental market for some time.

ERA’s Mr Lim said condo rents could ease further since 26 new projects are expected to be completed in 2023. With the increased supply, some home owners may reduce their rent to better compete for tenants, he added.