With private rents harder hit by sluggish market conditions, it is no longer that much more expensive to rent a suburban condo than a large public flat.
Renting a suburban condo unit rather than a five-room Housing Board flat could have set you back an extra $1,000 in 2011, on average.
Yet, doing so costs just $500 more a month today. This is based on SRX Property data on median monthly rents for HDB flats and non-landed private residential units outside the central region, excluding executive condominiums.
In 2011, median suburban condo rents ranged from $3,100 to $3,300 each month. For HDB five-room and executive flats islandwide, the range was $2,200 to $2,600.
Suburban condo rents have fallen to about $2,700 since the second half of last year. But HDB five-room and executive flats were still fetching rents of $2,200 and $2,400 respectively at the end of last year.
HDB landlords thus seem to have escaped the brunt of the sluggish property market. But is there a danger that tenants will switch to condos as the price gap closes?
Experts doubt so, pointing out that median rents do not reflect factors such as flat size. On a per square foot basis, the rental gap has not shrunk significantly (see graph).
Condo sizes have been shrinking over the years, so tenants today may pay less simply because they rent smaller units, said experts.
Chris International director Chris Koh said reduced housing allowances for expatriates could be a factor.
Suntec Real Estate Consultants director of research and consultancy Colin Tan said the aggregate data could also disguise differences like location. "In a down market, tenants usually relocate from... a less central location to a more central location."
Landlord Ian Tham, 49, is banking on his one-bedroom condo unit's location near Dhoby Ghaut MRT station. Nearby condo units still fetch rents of $3,100 to $3,200, he noted.
Yet many potential tenants are offering just $2,500 for his. "Tenants are spoilt for choice now. But I'm not under pressure to rent this out, so I won't accept a bad deal," he said.
The wider private rental market, in contrast, is expected to continue facing downward pressure.
Experts said rental supply is expected to increase this year, as more condos are completed and HDB upgraders seek to rent out their flats.
But HDB rents are likely to continue staying afloat as the pool of potential tenants is larger.
"HDB flats enjoy demand from both S Pass and Employment Pass (EP) holders, whereas S Pass holders would probably not be able to afford to rent a condo," said Orange- Tee research manager Wong Xian Yang, referring to two types of foreign worker employment passes.
The minimum monthly salary is $2,200 for an S Pass holder, and $3,300 for an EP holder.
ERA Realty key executive officer Eugene Lim agreed, noting that HDB rental transactions rose 5.8 per cent in the first three months of the year, to 11,239 units. This is also up from the same period last year.
"This shows the attractiveness of HDB flats," he concluded.