Rents for condos increase after a seven-month decline

After seven months of declining rents, condominium rents have slightly rebounded in March. The increase is attributed to the strong leasing demand that has returned from tenants after the Chinese New year celebrations.

The rental volumes of both HDB and condo flats rose in March after falling during February. These are based upon the flash estimates published by SRX on April 18th.

Rents for condos increased by 0.3 per cent due to increased competition. Data showed that, year on year, condo rentals were down 3.4%.

The rental volume grew 19.1 per cent in March to 5,677 units, up from 4,766 in February.

Rents were up 14.9% year-on-year, but down 6.9% compared to the average of the last five years for March.

The shrinking gap in prices between HDBs (high density apartments) and condos is credited by property analysts as the reason for the increased demand for condo rentals.

This has made condominiums an attractive option for certain tenants.

According to other analysts, the increased leasing demand is due to landlords making concessions on rents.

Instead of leaving their condo units empty to pay their mortgage and taxes, landlords prefer to rent their units.

Rent gaps are still large, and it is less likely that tenants will switch from HDBs to condos.

HDB rentals remain cheaper than condos even though the condo rental market has softened.

As the Singaporean economy grows at a slower rate, there may be a reduced demand for foreign labor, which could result in fewer residential leases for HDB flats or private housing.

In addition, the supply of new HDB flats and newly-completed private housing units will continue to grow over the next two year period.

Find out more: The Hill condo

Outside Central Regions (OCR) accounted for 36.4 percent of all leasing volumes in March. It was closely followed by Rest of Central Regions (RCR) which accounted for 32.6% of total rental volumes and 31.6% from Core Central Regions (CCR).

Rents in RCR grew the most (0.9%), followed by CCR rents, which grew 0.3%). Rents in OCR decreased by 0.3 percent.

Rents in all regions fell compared to last year. CCR prices dropped the most at 5.5%, followed closely by RCR prices at 2.6%, and OCR prices at 2.0%.

HDB rents have also risen for the second consecutive month. They are up by 0.6 percent from February. All room types saw rents rise, not just in mature estates.

The rents of mature estates rose 0.6% on the month, and 7.5% on the year. Non-mature estates rents also increased by 0.7% on the month, and 8.9% on year.

In March, HDB flats with more rooms commanded higher rental rates. The five-room flat rent rose 1.5% and the executive flat rent rose 1.30%. The rents of four-room flats were up 0.3 per cent while the rents of three-room apartments rose 0.8 per cent.

HDB leasing volumes recovered in March as well, with an increase of 9.8 per cent from February to 2,689 flats.

The March volume is down 11.1% compared to last year, and 12.1% fewer than the five-year average.

This may be because more Malaysians are seeking jobs in Singapore, to take advantage the stronger Singapore Dollar. Some may have chosen to stay in Singapore, rather than commute every day.

In March, four-room apartment rentals accounted for 36,3% of total rental volume, followed by flats with three rooms (33,6%) and flats with five rooms (24,5%). HDB rental volumes were only 5.7% executive flats.

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