The rents of Housing and Development Board (HDB) flats have dipped for the first time since January because renters are now looking at the market for condos, where rents are still falling.
Flash estimates released by SRX and 99.co on Friday (Jun 21) showed that HDB rents fell 0.3 per cent month on monthly, but were 6.2 per cent higher than the previous year.
Market watchers have attributed the drop in rents to a decline in the demand for both markets, because of a weaker employment market.
Many young Singaporeans are also being encouraged by the sluggish job market to hold off moving out of their parents home and letting their own house or returning to their parents to live.
The number of Employment Pass (EP) holders has decreased and condo demand increased.
The constant tightening of the criteria for the S Pass is leading to the advisability of fewer S Pass holders. In the same way there were fewer condo tenants looking for an HDB rental apartment.
A decline in rentals but, this could also benefit companies seeking to increase their workforce since the costs of housing for expatriates become more affordable.
Rents in the condominium market decreased for the second consecutive month and slowed down by 0.5 per cent on the month of April.
Compared with the same period the year prior when condo rents dropped, they were down 4.5 percent.
The drop in rents for both markets occurred as leasing volumes for both markets slowed.
HDB rental volumes dropped 13.2 percent to 2,558 units during the month of May, down from 2,946 units recorded in April. Year-on-year, the volumes were lower by 12.3 percent, and 8 per cent less than the five-year average volume for May.
Flats with four rooms accounted for 38.1 per cent of HDB rental volumes in May. They were being followed by 35.4 per cent for three-room flats, 22 per cent for five-room flats, and 4.5 per cent for executive flats.
The rents for five-room apartments were higher by 0.8 per cent in May from the previous month; prices for other rooms decreased.
The three-room flat rental rate recorded the largest decrease in month-to-month terms of 0.7 per cent. The four-room apartment rents (down by -0.5 percent) and the executive apartment rents (down by -0.4 percent) followed.
Rents for the mature estate fell by 0.8 percent from April. Non-mature estate rents increased by 0.5 percent. Year over year the non-mature and mature estate rents increased 5.9 percent and 6.9 per cent, respectively.
The less demand for HDBs could also be due to seasonality as tenants and landlords traveled abroad prior to the June holidays and this led to less rental activity.
Rents could increase after vacations.
In the condominium market the rental volume decreased 12.2 percent in the month, to 5,155 units that were rented in May, from 5,874 units in April. Year on year the rental volume was 0.4 percent lower and 5.7 per cent lower than the five-year average volume for May.
The Outside Central Region (OCR) was responsible for 35,5 percent of all transactions in May it was only slightly ahead of other regions. This was followed by the Rest of Central Region (RCR) which contributed 33.5 percent, and the Core Central Region (CCR) contributed 30.9 percent.
Rents across all three regions fell month-on-month, but the RCR saw the biggest decrease, which was 1.1 percent. Rents fell by 0.2 percent in the CCR as well as in the OCR, by 0.7 percent in the OCR.
CCR rents showed a year-on -year decrease of 3.7 per cent, while RCR and OCR rents fell each by 4.9 percent.