SINGAPORE - Singapore’s private rental market remained soft in February, while Housing Board rents rose to reach a new all-time high after dipping the month before.

Based on flash estimates released by property portals Singapore Real Estate Exchange and 99.co on March 19, condominium rental prices fell 1 per cent from January to mark net negative growth for the 13th consecutive month. 

The chief data analytics officer of 99.co, Mr Luqman Hakim, noted that condo rents had hit their lowest point since January 2023 and attributed this downward spiral to a supply glut that has been in place since 2023.

Ms Christine Sun, chief researcher and strategist at real estate firm OrangeTee Group, said: “Many condominiums reached temporary occupation permit last year, resulting in more new homes being put up for rental.

“The increased competition may have driven down rent prices in certain locations. As private rents continue to adjust, some tenants may switch from renting HDB flats to private homes in the coming months.”

By region, core central region (CCR) or prime area rents fell 1.6 per cent from January, with the rest of central region (RCR) or city fringe rents down 0.5 per cent, and the outside central region (OCR) or suburbs registering a 0.6 per cent decline.

Overall rents fell 4 per cent year on year, with rents in the CCR down 5.7 per cent. RCR rents declined 3.9 per cent and OCR rents dipped 2.1 per cent.

Rental volumes for condos were lower as well, falling 21 per cent from the previous month and 7.7 per cent year on year to an estimated 4,715 units in February.

This was 11.9 per cent lower than the five-year average volume for the month of February.

By region, 35.8 per cent of total private rentals were from the OCR, with 32.8 per cent from the RCR and 31.4 per cent from the CCR.

Property firm ERA Singapore’s key executive officer Eugene Lim noted that the condo rental market was “facing challenges” amid rising retrenchments and more available homes for lease.

“Tenants are seeing more rental options on the market and some landlords are more willing to discuss rental terms, unlike a year ago,” he said.

On the other hand, HDB rents in February grew 1 per cent from January to a new all-time high but volumes fell 19.1 per cent to an estimated 2,448 flats rented, compared with 3,027 units in January.

Mr Luqman of 99.co said rising HDB rents were due to strong demand from renters seeking relief from inflation, as rents for condominium units were “still considered too expensive”.

Considering how the decline in volumes for condo and HDB rentals was mainly due to the Chinese New Year festivities in February, he expects volumes for both markets to pick up in the second quarter of 2024.

Compared with January, HDB rents in mature estates grew 1.3 per cent in February, while rents in non-mature estates inched up 0.5 per cent.

All room types recorded month-on-month rental increases, led by executive units (2.6 per cent) and four-room flats (1.5 per cent). Rents for three-room HDB units were up 0.4 per cent and 0.3 per cent for five-room flats.

Overall HDB rental prices were up 8.4 per cent year on year, with mature estate rents increasing 7.2 per cent and non-mature estate rents growing 9.5 per cent.

On a year-on-year basis, all room types recorded rent increases, with executive flat rents rising 9 per cent, four-room flat rents up 8.5 per cent, and five-room flat rents increasing 8.1 per cent. Rents for three-room units grew 7.8 per cent.

February’s rental volume represents an 8.4 per cent decline year on year and is 6.9 per cent lower than the five-year average volume for the month.

By room type, the majority, or 37.3 per cent, of the total volume came from four-room HDB flat rentals and 31.7 per cent from three-room flats. Five-room unit rentals contributed to 25.4 per cent of the month’s volume and 5.7 per cent were from executive units.

Mr Mark Yip, chief executive of real estate firm Huttons, said February’s lower rental volume could be due to more tenants moving to larger HDB flat types as a result of policy changes, which may have in turn pushed up rents for bigger executive flats.

While he foresees condo rents may bottom out in the first half of 2024 and stabilise in the second half, Mr Yip believes HDB rents could increase up to 8 per cent for the year as tenants seek more affordable housing options amid a lower supply of flats reaching minimum occupation period (MOP).

Likewise, Ms Sun of OrangeTee Group said she believes the limited supply of new MOP flats may “prop up HDB rentals for a while, unless private rents dip drastically and pose competition to the HDB market”. THE BUSINESS TIMES