Condo rents in October are down; demand-supply gap may widen

The decline in rents was due to a fall of 0.1 percent for mature estates. Rents on non-mature properties increased by the same percentage.

HDB’s October rental volumes were also up by 1.7 percent compared to the average five-year volume for that month.

Property Watches attributes the stagnation of rental prices in the private sector to an increased housing supply as condominiums have been completed more frequently over the past 12 months.

Many expect the trend of declining condo rental volumes over the next two months due to the end-of-year holidays.

Experts have also warned that the rental market will continue to slow down in 2024 due to a continued contraction in domestic demand. A new housing supply is expected to add downward pressure on rent prices.

On the private market, many expect price growth to slow to between 2 and 5 percent this year. That’s down from 29.7 percent in 2020, and between 12 to 14 percentage points in 2023.

According to room type, the rent for a three-roomer fell by 0.6% from September levels 2023. The rent for a five-roomer dropped even more, by 1.4%. Rental prices for units with four rooms increased by 0.1 percent, and rents for executive apartments increased by 0.9 percent.

HDB’s overall rental volumes increased by 2.4 percent on a per-month basis, with around 2,830 apartments rented as opposed to 2,763 in September 2023. In a comparison of the same month last year, HDB rental volumes were up 14.9%.

The rents for the OCR and the Rest of Central Region (RCR) grew by 12,2 and 11,2 percent respectively. Rents in the CCR increased by 8.2 per cent.

Rental volumes rose marginally by 0.6% on the previous year. However they remain 11.4% lower than the 5-year average for the month October.

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Four-room units accounted for 37.7% of the total HDB rental volume. Three-roomers (31.9%), five-room units (24.5%) and executive flats (5.9%) followed.

While the HDB’s rental rates may appear stable at present, the supply of new MOP flats as well as the fall in private rental rates, will cause downward pressure to the HDB’s rental rates.

Comparing the volumes by region, 34.8% of all volumes were from OCR. The CCR accounts for the remaining 30,9 per cent.

According to SRX and flash estimates for October 2023, condo rents were down 0.2 per cent from a previous month. The Outside Central Region was the most affected, with a fall of 0.9 percent. Core Central Region also saw a decline of 0.3 percent.

Rents at the Housing and Development Board (HDB), which manages housing and development, fell for a first time since October 20,21.

The number of condos rented was also down month-on-month, with an estimated 5,402 rental units. This represents a decline of 5.4 percent from 5,713 in September 2023.

The HDB rental prices have declined by 0.4% from September levels 2023.

This could be a result of a lack in lease renewals due to more tenants moving to new homes as new HDB and condos are completed.

The increased supply of apartments for rent allowed tenants to exert more pressure on landlords.

HDB flats continue to be “the most affordable option” for tenants on a budget, and also for those upgrading from private properties during their 15-month period of waiting before they are eligible to buy a resale property.

Renters are becoming more conservative with their rental budgets due to the higher unemployment rates and lower salary increases.

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