BOTH private and public housing rentals continued their decline in the first month of the year with Housing and Development Board (HDB) and condominium rental prices each posting a 0.7 per cent decrease from December 2023 levels.

Flash data by SRX and 99.co released Tuesday (Feb 20) showed that the Core Central Region (CCR) was the only area to register rental growth at 0.4 per cent, while rents in the Rest of the Central Region (RCR) declined 1.6 per cent with the Outside Central Region (OCR) booking a 1 per cent decline. 

Year on year, overall rents increased slightly by 0.4 per cent, led by rental growth in the OCR, which was up 2.4 per cent. Rentals fell 0.7 per cent on the year in the CCR and 0.6 per cent in the RCR.

Luqman Hakim, chief data and analytics officer at 99.co, noted that this marks the sixth month of declines for condo rental prices, which have fallen 4.3 per cent from their all-time highs since the increase in supply last year.

“It is a challenging time for landlords who are trying to lease their units,” said Eugene Lim, key executive officer of ERA Singapore. “Beyond just higher mortgage payments and increased property tax, rising retrenchment numbers have led to softer tenant demand. Some landlords would rather compromise on rents than leave their units vacant for an extended period of time.”

Private rental volumes grew 6.2 per cent with an estimated 6,016 units rented out in January 2024 from 5,665 units in the previous month.

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The latest figure, however, stands 4.6 per cent lower on a year-on-year basis and is 13 per cent lower than the five-year average volume for the month of January.

Breaking it down by region, most or 38.5 per cent of condo rentals came from the OCR, with 32.6 per cent from the RCR and 28.8 per cent from the CCR.

Christine Sun, chief researcher and strategist at OrangeTee Group, observed that demand for the private rental market has increased after the year-end holidays as many tenants have signed new leases, or renewed their existing ones, at the start of 2024. She, however, anticipates a dip in condo rental volumes for February due to the Chinese New Year holidays, as landlords usually do not open their properties for viewing during this period.

HDB rentals were down as well, decreasing 0.7 per cent from December 2023 levels, as rents declined in both mature and non-mature estates by 1.2 per cent and 0.3 per cent respectively.

January HDB rents held steady for four-room units on a month-on-month basis, though three-room rentals fell 1.2 per cent and executive flat rents retreated 3 per cent. Five-room rentals dipped 0.6 per cent. Year on year, overall rents were 8.6 per cent up from January 2023 levels with mature estates posting a 7.5 per cent growth and non-mature estate rents rising 9.7 per cent.

All room types registered record rent increases, starting with five-room units which registered a 9.2 per cent year-on-year increase. This was followed by four-room units (8.7 per cent), executive units (8.2 per cent) and three-roomers (7.8 per cent)

Volumes in the HDB market grew 4.6 per cent month-on-month to an estimated 3,024 flats rented compared to 2,892 in December 2023, representing a 5.3 per cent increase from January 2023 levels and 1.4 per cent up from the five-year average volume for the month of January.

By room type, 38.4 per cent of HDB rentals were for four-room flats, followed by three-roomers (33.6 per cent), five-room flats (22.8 per cent) and executive units (5.2 per cent).

Lim of ERA highlighted that the proportion of four-room flats being rented out has increased from December 2023 levels when this flat type contributed to 36.2 per cent of volumes.

“As the Singapore economy experienced more retrenchments, tenants may have instead chosen to be cautious and rent a smaller flat that is more affordable,” he surmised.

Commenting on the overall volume pick-up for both condominium and HDB rental units, 99.co’s Hakim said he believes tenants may have been “more willing to enter the market” upon seeing a significant rental price drop as compared to six months ago.

They may also “seize this opportunity” to negotiate a lower rental rate in the condo rental market, he pointed out.

Mark Yip, chief executive officer, Huttons, believes the HDB market’s rental decline may be “temporary” as the higher volumes point to firm demand, in his view. “The HDB rental market continues to attract tenants looking for affordable accommodation. However, should the dip in condo rents deepen, that may close the gap between condo and HDB rents. Some tenants in HDB flats may then be tempted to move to a condo. When that happens, HDB rents may start to consolidate and move southwards.”

Though OrangeTee’s Sun said that the Singapore government’s provision of a Parenthood Provisional Housing Scheme (PPHS) voucher could “benefit some smaller HDB resale flats and increase their rental demand”, she thinks the possibility of overall HDB rent prices going up “is not high”. She added: “Even if prices were to rise, it would probably affect smaller HDB flats as most couples taking up this scheme would usually not lease bigger flats due to cost concerns. Nonetheless, the extent of the impact on rental demand and prices will still depend on how many people qualify for the vouchers and the amount given, pending more announcements from the authorities.”