Condo, HDB Rents Hit New Peaks In April, With Reopening Likely To Keep Market Tight

May 12, 2022

Condominium rents have reached new heights in April after it rose 2.3 per cent during the month. Credit: The Straits Times

Residential property rentals hit their highest levels in April, surpassing their last peaks in 2013, with rents expected to keep rising as Singapore reopens and foreigners return to work here.

Condominium rents rose 2.3 per cent in April after gaining for 16 months straight, capping the previous peak in January 2013 by 1.8 per cent. Year on year, rents were up 15.1 per cent compared to April 2021, according to flash figures from SRX Property and 99.co released on Wednesday (May 11)

Rents for Housing Development Board (HDB) flats showed a similar dynamic, continuing to rise for a 22nd consecutive month. HDB rents were up 1.9 per cent in April and 14.3 per cent higher year-on-year. HDB rents last peaked in August 2013.

Volume however slipped in the last month. April saw 3,551 condo units rented out, down 21 per cent from the 4,497 units in March. This is 28.9 per cent lower than the year-ago period and 23.2 per cent less than the 5-year average for the month of April.

The HDB market also saw lower leasing activity. Volume fell 20.7 per cent month on month and 24.5 per cent on-year to 1,382 units in April 2022. This is 28 per cent lower than the 5-year average volume for the month of April.

Market watchers pointed to a dwindling stock of units available for rent, which has been further stretched by delays in the construction of new HDB flats and condos.

“Some tenants have booked units even without viewing them as competition is stiff and stock is lacking. To secure units quickly, some were transacted above the asking rents,” said Christine Sun, OrangeTee & Tie’s senior vice-president of research and analytics.

Still, “rents have been escalating over the past few months and market resistance could be setting in,” said Sun. “More tenants are renting units together to share costs. Some Malaysians have decided not to renew their leases but have chosen to travel across the Causeway on a more regular basis, which is a cheaper option for these workers.”

As Singapore opens its travel borders, property consultants are expecting to see a shift in the rental market.

Leonard Tay, head of research at Knight Frank, noted that despite the implementation of the Vaccinated Travel Framework (VTF), tenants are likely to maintain their leases due to the uncertainty of the Covid-19 situation. However, he expects to see more professionals and skilled workers entering Singapore as the travel measures stabilise.

“Anecdotally, those who were based in Hong Kong have also been contributing to the increase in rents, looking to relocate to Singapore,” he said.

There is also a high propensity for expats to bring their families when they relocate to Singapore, driving demand for larger rental units especially in the CCR and RCR, noted Wong Xian Yang, head of research at Cushman & Wakefield.

Tay added that some Malaysian workers have also decided that they would rather live in Singapore than go through the daily commute across the border, which would further drive up rent.

That said, Huttons CEO Mark Yip noted that many Malaysians are renewing their lease for just a short period of time, adopting a wait-and-see attitude as they are unsure whether the borders will stay open.

“This supported rents in April, but once things stabilise, some Malaysians may eventually give up their leases,” he said.

Wong added: “While the reopening of borders would lead to some people returning to their home countries, we anticipate demand to increase on balance, supporting further rental growth. Private residential rents could increase between 6 per cent and 9 per cent in 2022, while rental growth could moderate in 2023 as more supply completes.”

ERA Realty head of research and consultancy Nicholas Mak also predicts that HDB and condo rental indices will continue to rise this year, ending between 8 per cent to 12 per cent for the whole year 2022.

Rents for private apartments in the core central region (CCR) saw the highest monthly gain in April at 3.1 per cent, followed by the outside of central region (OCR) at 2.1 per cent and the rest of central region (RCR) at 1.8 per cent. Year on year, the CCR, RCR and OCR rose 14 per cent, 14.4 per cent and 16.5 per cent, respectively.

District 25, which mainly comprises Kranji and Woodlands, saw the highest growth in median rental prices. Year on year, median rents for the area grew as much as 43.8 per cent - 15.5 percentage points ahead of the second-highest rise at 28.3 per cent seen in District 17, where Changi International Airport sits. Month on month, median rents for District 13, which covers MacPherson, Potong Pasir and Braddell, and District 25 grew the most at 15 per cent. District 11 (Novena, Newton, and Thomson) saw monthly growth of 12.5 per cent.

In contrast, District 3 (Alexandra, Commonwealth, Tiong Bahru and Queenstown) and District 4 (Harbourfront and Telok Blangah) saw the biggest monthly drops in median rents, falling by about 7.1 per cent and 6.3 per cent respectively.

According to data from 99.co and SRX Property, no median figures were tabulated for Districts 6 (City Hall and Clarke Quay) and 24 (Lim Chu Kang and Tengah) due to their lack of transactions. Excluding the two sectors, median rents were year-on-year higher in every district. Districts 1, 2, 13, 16, 17, 25 and 26 all saw over 20 per cent growth, while Districts 3, 4, and 10 (Bukit Timah, Holland Village, and Tanglin) each grew less than 5 per cent.

About 38.1 per cent of total condo rental volumes in April were from the OCR, followed by 32 per cent from the RCR and 29.9 per cent from the CCR.

Tricia Song, head of research at CBRE added that rents at 3- and 4-bedders have moved up faster than the smaller homes.

She said: “This could be due to the demand for larger spaces for work from home trends, and higher demand from families who have sold their properties and are waiting for their new homes to be completed.”

In the HDB market, mature estate rents climbed 2.2 per cent in April, while non-mature estate rents rose by 1.7 per cent. Compared to the previous year, mature estate and non-mature estate rents were higher by 14.2 per cent and 14.4 per cent, respectively.

Rents rose across all room types in April. Three-room HDB flats saw rents advancing 1.4 per cent, 4-room and 5-room flat rents grew 2.3 per cent each, while executive flat rents rose 1.2 per cent.

On a yearly basis, 3-room, 4-room, 5-room and executive flat rents advanced by 13.2 per cent, 14.7 per cent, 15.1 per cent and 10.6 per cent respectively.

The highest median rental price increase was seen in Choa Chu Kang, which rose 11.9 per cent from that of March and 23.7 per cent from the year ago period.

Bukit Timah, Queenstown and Bukit Panjang also saw notable monthly advances at 11.3 per cent, 9.7 per cent and 8.3 per cent respectively. Meanwhile, Ang Mo Kio and Yishun saw median rents fall 2.9 per cent and 2.3 per cent respectively.

Year on year, HDB flats at Clementi (20 per cent), Bukit Panjang (18.2 per cent) and Sembawang (17.9 per cent) saw some of the biggest increases, while Ang Mo Kio (2 per cent) and Serangoon (4.5 per cent) saw some of the smallest. The Central Area’s median rent saw no monthly or yearly change.

Breaking down by room types, in April 2022, 37.4 per cent of the total volumes are from 3-room flats, 36.7 per cent are from 4-room, 21.9 per cent are from 5-room and 4.1 per cent are from executive flats

Credit: Business Times

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