HDB rental prices drop for the first time since October 2021

In the real estate realm, we're witnessing a dip in condo rental volumes and prices for the third consecutive month. Simultaneously, HDB rental prices are experiencing a drop for the first time since 2021. 

Let's jump into the details to understand the dynamics shaping this shift in our housing market.

Condo rental market

In October 2023, condo rents experienced a marginal decrease of 0.2 per cent from September 2023. Regional disparities are notable, with RCR (Rest of Central Region) rents inching up by 0.8 per cent, while CCR (Core Central Region) and OCR (Outside Central Region) rents faced a slight downturn by 0.3 per cent and 0.9 per cent, respectively.

Year-on-year data reveals an overall increase of 10.8 per cent in rents from October 2022. Additionally, distinct upticks are observed in CCR (8.2 per cent), RCR (12.1 per cent), and OCR (12.2 per cent).

Despite this, rental volumes took a hit, decreasing by 5.4 per cent month-on-month. The count stands at 5,402 units rented in October 2023, down from 5,713 units in September 2023. 

On another note, year-on-year rental volumes increased by 0.6 per cent. However, this figure remains 11.4 per cent lower than the five-year average for October. When examining regions, OCR contributed 34.8 per cent, RCR 34.3 per cent, and CCR 30.9 per cent to the total rental volumes in October 2023.

This table combines the information regarding changes in rent, year-on-year rent increases, and regional contribution percentages:

HDB rental market

In the HDB rental landscape, October 2023 witnessed a 0.4 per cent decline in rents from September 2023. Mature Estates experienced a slight dip of 0.1 per cent, while Non-Mature Estates saw a modest increase of 0.1 per cent.

Year-on-year data, on the other hand, tells a different story, showcasing an overall increase of 14.1 per cent in rents from October 2022. The surge is further broken down into 12.7 per cent for Mature Estates and a more substantial 15.4 per cent for Non-Mature Estates.

Analysing room types, Three Room and Five Room rents decreased by 0.6 per cent and 1.4 per cent, while Four Room and Executive rents increased by 0.1 per cent and 0.9 per cent, respectively.

Contrary to the condo market, HDB rental volumes experienced a 2.4 per cent uptick month-on-month, with an estimated 2,830 units rented in October 2023 compared to 2,763 units in September 2023. 

Year-on-year, rental volumes increased by 14.9 per cent, surpassing the five-year average volume for October by 1.7 per cent. The breakdown by room type indicates that 31.9 per cent of total volumes are from Three Room, 37.7 per cent from Four Room, 24.5 per cent from Five Room, and 5.9 per cent from Executive units.

Factors influencing this trend

Several factors contribute to this shift in our rental landscape:

Pandemic-induced changes

Firstly, pandemic-induced rental demand pressures have eased. According to Luqman Hakim, Chief Data & Analytics Officer, the reopening of land borders has diminished the need for temporary rentals, particularly for workers from Malaysia who constitute a significant portion of Singapore's workforce. 

Spillover from new launch absence

Luqman also shared that the absence of recent new property launches has had a spillover effect, impacting the rental market negatively. 

Traditionally, homeowners would sell their properties before new launches to avoid higher ABSD charges and reside in rental homes until the new launches are ready. 

The scarcity of new launches has disrupted this pattern, affecting the rental market and contributing to a rise in vacancy rates, the highest observed in five years.

Completion of more homes

Moreover, the completion of more homes, evidenced by around 9,000 private residential units completed in Q3, has seen a surge in local households moving into new dwellings. 

The trend is expected to continue, with approximately 20,400 private homes slated for completion in 2023, marking the most significant annual supply completion since 2017. These properties include notable projects like The Woodleigh Residences, Affinity at Serangoon, and Riverfront Residences. 

All these factors intertwining throughout the year have resulted in both the condo and HDB rental markets exhibiting tepid conditions, with the trend persisting into October 2023.

Supply forecast

Looking ahead, forecasts predict an additional 8,959 private residential units to be completed in 2024. The increasing supply is anticipated to alleviate the pressure on asking rents as domestic demand subsides.

ALSO READ: All you need to know about HDB rental prices and latest rental transactions in 2023

This article was first published in 99.co.