Condo HDB rents hit new peaks in April; reopening to keep market tight
Condo HDB rents hit new peaks in April; reopening to keep market tight. RESIDENTIAL property rentals reached new highs in April, surpassing their previous highs in 2013, with rents projected to continue to rise as Singapore reopens and foreign workers return.
Condominium rents increased by 2.3 percent in April after rising for 16 months in a row, above the previous high of 1.8 percent in January 2013. According to data released on Wednesday by SRX Property and 99.co, rentals were up 15.1 percent year over year in April 2021. (May 11)
Housing Development Board (HDB) flat rents followed a similar pattern, rising for the 22nd month in a row. In April, HDB rents increased by 1.9 percent, and were 14.3 percent higher year over year. Rents in HDBs peaked in August of 2013.
However, in the recent month, volume has decreased. In April, 3,551 condo units were rented out, down 21% from 4,497 in March. This is 28.9% lower than a year ago, and 23.2 percent lower than the 5-year average for the month of April.
Leasing activity in the HDB market was also down. In April 2022, volume declined 20.7 percent month over month and 24.5 percent year over year to 1,382 units. The volume is 28% lower than the 5-year average for the month of April.
Market observers noted a shrinking supply of available rental apartments, which has been exacerbated by delays in the construction of new HDB flats and condos.
“Because competition is fierce and inventory is scarce, some renters have booked units without even seeing them.” “Some properties were transacted beyond asking rents to get units swiftly,” said Christine Sun, OrangeTee & Tie’s senior vice-president of research and analytics.
“Rents have been rising over the last few months, and market resistance may be forming,” Sun said. “More tenants are renting multiple units to save money. Some Malaysians have elected to not renew their leases and instead go across the Causeway on a more regular basis, which is a less expensive choice for these workers.”
Property advisors anticipate a shift in the rental market when Singapore’s travel borders open.
Despite the implementation of the Vaccinated Travel Framework (VTF), tenants are likely to keep their leases because to the uncertainties surrounding the Covid-19 situation, according to Leonard Tay, head of research at Knight Frank. As the travel measures stabilize, he expects to see more experts and talented employees enter Singapore.
“Those who were based in Hong Kong and were looking to relocate to Singapore have also been contributing to the increase in rents,” he said. Expats are also more likely to bring their families to Singapore, fuelling demand for larger rental apartments, particularly in the CCR and RCR, according to Wong Xian Yang, head of research at Cushman & Wakefield. One of the new potential development for rental is Lentor Modern. Tay also mentioned that some Malaysian workers have elected to live in Singapore rather than commute over the border on a regular basis, which would drive up rent even further. Huttons CEO Mark Yip, on the other hand, stated that many Malaysians are renewing their leases for only a limited time, as they are concerned whether the borders would remain open.
“While this boosted rentals in April, once things settle down, some Malaysians may opt out of their leases,” he said.
“While the reopening of borders will cause some people to return to their home countries, we expect overall demand to improve, supporting additional rental increases,” Wong noted. In 2022, private residential rentals are expected to rise by 6% to 9%, with rental growth slowing in 2023 as more supply is completed.”
Nicholas Mak, ERA Realty’s head of research and consultancy, believes that HDB and condo rental indices will continue to grow this year, concluding the year at between 8% and 12%.
Private apartment rents in the core central region (CCR) increased by 3.1 percent in April, followed by 2.1 percent in the outside of central region (OCR) and 1.8 percent in the rest of central region (RCR). The CCR, RCR, and OCR all increased by 14%, 14.4%, and 16.5 percent year over year, respectively.
The biggest growth in median rental costs was seen in District 25, which includes Kranji and Woodlands. Year on year, median rents in the area increased by 43.8 percent, which is 15.5 percentage points more than the second-highest increase of 28.3 percent in District 17, which is home to Changi International Airport. Month over month, median rents in District 13 have increased.
In contrast, median rents in District 3 (Alexandra, Commonwealth, Tiong Bahru, and Queenstown) and District 4 (Harbourfront and Telok Blangah) fell by roughly 7.1 and 6.3 percent per month, respectively.
Due to a paucity of transactions, no median numbers were calculated for Districts 6 (City Hall and Clarke Quay) and 24 (Lim Chu Kang and Tengah), according to data from 99.co and SRX Property. With the exception of the two sectors, median rents increased year over year in every district. Districts 1, 2, 13, 16, 17, 25, and 26 all expanded by more than 20%, whilst Districts 3, 4, and 10 (Bukit Timah, Holland Village, and Tanglin) grew by less than 5% apiece.
In April, the OCR accounted for 38.1 percent of overall condo rental volumes, followed by 32 percent for the RCR and 29.9 percent for the CCR.
Rents for 3- and 4-bedroom homes have risen quicker than rents for smaller properties, according to Tricia Song, CBRE’s head of research.
“This could be related to the demand for larger areas for work from home trends, as well as increasing demand from families who have sold their houses and are awaiting the completion of their new homes,” she said.
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