May rental volume for condos down 45%; market observers expect rents to continue to weaken
THE volume of private apartments and HDB flats rented may have bottomed out in the second month of the circuit breaker period but rents could continue to weaken, market observers said in response to flash data released by real estate portal SRX Property on Wednesday.
The number of non-landed private homes leased increased by 1 per cent to 2,881 units in May from 2,853 in April, SRX data showed.
May’s rental volume for these private flats is still 45.7 per cent lower from a year ago, and 38.8 per cent off the five-year average volume for the month.
Over in the HDB rental market, the number of flats leased fell last month by 4.2 per cent to 1,147 flats, compared with 1,197 in April.
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HDB rental volumes in May were down by 45.1 per cent from a year ago. They were also 42 per cent lower than the five-year average volume for the month. Of these leasing in May, 35.3 per cent are for four-room flats, 33.5 per cent for three-room units, 25.8 per cent for five-room units, and 5.4 per cent for executive flats.
The low leasing numbers are the result of the extension of the circuit breaker from April to May, which put a lid on the transaction volume in both the HDB and private residential leasing markets, said ERA Realty head of research and consultancy Nicholas Mak.
He noted that transactions continue to be inked even though prospective tenants could not visit to view properties offered for lease.
“This is because compared to property buyers, tenants are open to leasing properties through viewing photos and video clips of the properties on leasing websites, as most leases are only for one to two years,” he said.
“The cost of renting an unsuitable property is lighter than buying an unsuitable property. If the tenant does not like the property, he could move to another property at the end of the lease.”
In the private rental market, rents in May dipped 1.4 per cent from April.
“Landlords were probably more eager to secure tenants for their properties in this uncertain period even if it means lowering the rentals,” said Mr Mak.
Year on year, private rents in May are the level they were in May 2019, but are down 17.3 per cent from their peak in January 2013.
For the HDB rental market, SRX data showed that rents in May fell by 1.3 per cent from April. Year on year, HDB rents fell by 0.8 per cent and were 15.6 per cent down from their peak in August 2013.
Looking ahead, observers said the rental market may improve once restrictions are reduced, but progress might be dampened by the economic outlook.
Christine Sun, Orange Tee & Tie’s head of research and consultancy, said the rental situation may improve when travel restrictions are gradually eased and house viewings permitted as Singapore’s economy continues to reopen.
“That said, the rental market may face some challenges ahead as the hiring outlook is increasingly cautious amid the growing economic headwinds,” she said.
Mr Mak said that since restrictions on viewing properties remain in place, the leasing transaction volume in June is likely to remain at about the same level as in April and May.
He added that when the restrictions are eventually lifted, there will be a jump in the rental volume as some tenants may be waiting for the chance to move homes.
Yet some leasing demand could also be lost as some foreigners leave Singapore, such as those who have lost their jobs here.
As a result, Mr Mak predicts leasing demand this year for both private apartments and HDB flats could drop by 2 to 4 per cent. THE STRAITS TIMES