Residential property rentals expected to remain elevated this year after uptick in June

CONDOMINIUM and Housing Board (HDB) rental prices continued their upward trajectory in June 2022, climbing by 2.1 per cent and 2.3 per cent from the previous month, respectively.

This represents the 18th consecutive month of rental growth for condos as HDB rents rose for the 24th straight month, according to the latest flash figures from SRX Property and released on Thursday (Jul 14).

It also marks new highs for the rental prices of both property classes, said Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie.

Sun attributed the past few months’ surge in rental prices to the return of expatriates, permanent residents and international students with the almost-complete easing of Singapore’s border controls.

“HDB upgraders continue to add to the demand pool as many have rented units after selling their existing flats as they wait for the completion of their new homes and to avoid paying additional taxes on second properties. New units’ completion slowed down due to severe disruptions to global supply chains, lack of manpower and the rising cost of building materials,” added Sun. 

She foresees rental demand to hold firm with the continual inflow of foreigners and expatriates, which may keep rents elevated in H2 2022.

Likewise, Huttons chief executive Mark Yip is anticipating residential property rents to increase further in the second half of the year, backed by a positive economic climate that is supportive of higher employment.

Year on year, overall condo rents increased by 21.1 per cent and overall HDB rents grew 17.9 per cent.

Condominium rents in the Core Central Region (CCR), Rest of Central Region (RCR) and Outside Central Region (OCR) increased month on month by 2.2 per cent, 2.4 per cent and 1.7 per cent respectively – and 18.6 per cent, 21.3 per cent and 22.8 per cent on year.

About 4,175 condo units were rented in June 2022, up 4.7 per cent from the 3,989 units rented the previous month but 18 per cent lower on a year-on-year basis. 

99 Group’s head of research Pow Ying Khuan said the higher monthly RCR growth in rents could be due to the reopening of Singapore’s offices after previous work-from-home policies, which saw employees moving closer to the city to result in greater demand in the region.

This contrasts with the previous year when the work-from-home trend saw major demand shift towards suburban homes due to lower rental expenses, he said.

The uptick in June HDB rents was driven mainly by rental price growth for non-mature estates (3.1 per cent) compared to mature estates (1.5 per cent) with near-equal increases across all room types at 2.6 per cent for 3 and 4-room flats and 2.3 per cent for 5-rooms and executives.

Year on year, mature estates and non-mature estates saw rent increases of 15.7 per cent and 20.2 per cent respectively, with 5-rooms climbing at a steeper 19.2 per cent followed by 4-rooms (17.8 per cent), 3-rooms (17.6 per cent) and executive (14.6 per cent) units.

Pow highlighted the possibility that higher month-on-month demand for rental housing in non-mature estates could have resulted from tenants searching for apartments or homes with newer facilities, amenities and environments.

He believes the gradual spread in month-on-month increases across estate types and room types may be indicative of a back-to-office and back-to-school trend.

“It is also probable that demand for 5-rooms was highest year on year due to tenants wanting more space for themselves and their children, as they worked from home and went through home-based learning throughout 2021,” said Pow.

HDB rental volumes however fell both month on month and year on year to 1,395 flats rented in June 2022, declining 8 per cent from 1,516 units in May 2022 and down 23.9 per cent from the previous year. 

Yip of Huttons believes the lower monthly rental volumes could be due to some Malaysians not renewing their lease, and going back to their pre-Covid days of commuting daily to work in Singapore.

“HDB landlords are increasing their asking rents to compensate for the increase in interest rates on their other housing mortgage,” he observed.

By room type, 39.6 per cent of total June 2022 volumes are from 3-room HDB units, with 33.2 per cent from 4-rooms, 21.7 per cent from 5-rooms and 5.4 per cent from executive flats.

This version of article written by MICHELLE ZHU and first appeared at The Business Times.

Photo: ST FILE