After a seven-month slump, condo rents begun to inch upwards

The rents of condominiums increased slightly in March following seven straight months in decline. The rise was largely due to the demand for rentals from tenants returning after the Chinese new year period.

Both condo units and Housing Board flats (HDB) recovered in the month after a fall in February. The data is based off of the latest flash estimates by SRX & released on April 18, 2019.

In the face of increased competition, condo rents rose by 0.3%. According to the data, condominium rents fell by 3.4 percent year-over-year.

Rentals, on the other hand, rose by 19.1 percent over the course of a month, to 5,677 rental units in March. This compares with 4,766 rentals in February.

The rental volume in March was 14.9% higher compared to last year but 6.9% less than the five-year monthly average.

Property analysts attribute the rising demand for condominium rentals to the narrowing of the price gap between HDBs.

Condos have become more attractive to some tenants.

Analysts believe the strong leasing demand could be a result of more landlords offering lower rents.

Landlords would rather rent out their condo units than leave them empty. This will at least pay for their mortgage installments and taxes.

There is a significant rental difference between the HDB and condo markets, which makes it less likely for tenants to move from HDB to condominiums.

HDB rentals continue to be more affordable compared to condos despite a softening rental market.

Due to the slower growth of Singapore’s economy, foreign workers may not be as in demand, resulting in less demand for HDB apartments and private housing.

The supply of newly constructed private housing units is expected to remain steady for the next couple of years. New HDB apartments will also be available for their owners to rent out.

Outside Central Region (OCR), with 36.4% of total volume, was the area that saw the most leasing activity. Rest of Central Region (RCR) accounted for 32.6% of rental volumes. Core Central Region (CCR) accounted 31.6%.

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Rents increased in the RCR the most with a rise of 0.9 per cent. They were followed by rents that rose in the CCR with 0.3 per cent. Rents fell by 0.3 % in the OCR.

The rental price in every region fell from the year before. CCR rental prices fell the most (5.5%), followed by RCR (2.6%) and OCR (2.1%).

HDB rents increased for the second month in a row, with a gain of 0.6% from February. All room types, including those in mature and nonmature estates saw an increase in rents.

Rents on mature estates were up by 0.6 percent on the previous month and 7.5 percentage points higher than last year. Meanwhile, rents on non-mature properties rose by 0.7 percent on the prior month and 8.9 percent over last year.

HDB’s larger flats were rented at higher rates in March. Five room flats saw a rent increase of 1.5 per cent, and executive flats saw a rent rise of 1.3 per cent. Rents of four room flats saw a small increase of 0.3%, while those for three rooms flats went up by 8.0%.

HDB leasing numbers also improved in March, increasing by 9.8 % to 2,689 rented flats from 2,448 leased flats in February.

Volumes were down 12.1% year-on-year and 11 percent below the five year average for the month.

A higher demand for HDBs may be due in part to the fact that more Malaysians have decided to work in Singapore and take advantage of a stronger Singapore dollar. Some may be staying in Singapore to avoid daily commutes.

The four-roomed flats were still the most popular in March. They accounted 36.3 percent of all rental volumes, followed closely by three-roomed flats (33.6%) and five roomed flats (24.5%). HDB rental figures only included 5.7 per cent executive flats.

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