Rents for Housing and Development Board (HDB) flats have dropped in the first time since the beginning of January, since renters are focusing on the condo market, in which rents are continuing to fall.
Flash estimates released on Friday, June 21, by SRX and 99.co indicated that HDB rentals had decreased by 0.3 percent from month to month, but still 6.2 percent more than year-over-year.
Market watchers attributed the fall in rents to a decline in demand on both markets, mostly due to a weaker jobs market.
Many young Singaporeans are also being encouraged by the sluggish job market to hold off leaving their parents’ home and letting their own house or to return to their parents to live.
The market for employment continued to be a bit soft for certain industries such as IT that has had a negative impact on the amount of employment pass (EP) holders as well as the need for condos.
S Pass holders are decreasing because the requirements for getting an S Pass continue to tighten. Also, there were smaller numbers of HDB tenants looking to lease HDB flats.
Rents are declining, but this could be good for companies looking to expand their workforce since the cost of accommodation for expats are becoming more affordable.
Rents in the condominium market declined for the second month in a row decreasing 0.5 percent over the month that began in April.
The cost of renting a condo dropped 4.5 percent compared to the same period the previous year.
Both markets experienced a decrease in leasing volume and that is the reason rents dropped in both markets.
HDB rental volumes fell 13.2 percent, to 2,558 units compared to 2,946 units in April. Year-on-year, the numbers were down 12.3 percent, and 8 percent lower than the average five-year volume for May.
In May, HDB rental volume was 38.1 percent for four-room apartments, followed by 35.4% for three-room apartments, 22.4% for five-room apartment and 4.5 percent for executive apartments.
Rents for five-room homes were up by 0.8 percent in May compared to the previous month. Other types of rooms were down.
The most dramatic drop in rent was recorded by three-room flats which dropped 0.7 percent between month and month. The rent for a four-room apartment (down by -0.5%) and the executive apartment rents (down by -0.4%) was next.
Rents for mature estates dropped 0.8 percent from April, and that for non-mature estates increased 0.5 percent. Rents for mature and non-mature properties increased by 5.9 and 6.9 percent, respectively.
The lower demand for HDBs could also be seasonal as tenants and landlords travelled abroad prior to the June holiday, which resulted in less renting activity.
The rental business could re-establish itself after the vacation period ended.
In the market for condos, rental volumes fell 12.2 percent over the month, to 5,155 units that were rented in May, from 5,874 units in April. Year on year rentals were 0.4 per cent lower, and 5.7 percent less than the five-year average for May.
The volume of leasing within the Outside Central Region (OCR) was slightly higher than other regions in the Outside Central Region (OCR), accounting for 35.5 percent of the total transactions in May. The Rest of Central Region contributed 33.5 percent and was followed by the Core Central Region (30.9%).
All three regions posted a decrease in rents over the course of a month and the RCR having the highest decline with 1.1 per cent. Rents dropped by 0.2 percent in the CCR as well as by 0.7 percent in the OCR.
CCR rents saw a year-on-year fall of 3.7 per cent, while RCR and OCR rents both fell by 4.9 percent.