HDB rentals to stay soft due to fewer tenants
LEAN times are here to stay for Housing Board landlords, with rentals likely to stay depressed for the rest of the year.
Sluggish demand, arising from foreign labour curbs that have shrunk the pool of tenants, combined with a rising supply of HDB flats, will weigh on rentals, said property analysts.
Data from Singapore Real Estate Exchange showed the HDB rental index has fallen 2.3 per cent since the start of the year, hitting a three-year low last month. The median rent was $2,300.
This is only the beginning of a continued slowdown, said property analysts.
ERA Realty key executive officer Eugene Lim expects a further 5 per cent to 6 per cent drop by the year end. R'ST Research director Ong Kah Seng predicts a full-year fall of 5 per cent to 7 per cent, and SLP International Property Consultants research head Nicholas Mak, a drop of 4 per cent to 6 per cent.
In the longer term, OrangeTee research head Christine Li sees a decline of about 10 per cent by the end of next year.
Property agents said the problem is simply a lack of demand due to a shortage of tenants.
"Landlords are realistic as the market is not doing very well," said ERA Realty agent Noel Lu.
Many have been adjusting their rentals downwards, said agents.
The worst-affected areas are those without easy access to amenities such as public transport.
However, demand in mature estates and those near MRT lines is continuing to hold up, said ERA agent Zola Tan.
Tenants for units in such areas can be found within a month, as opposed to two to three months for less popular areas, he added.
For instance, PropNex Realty agent Michelle Lai, who focuses on Woodlands, noted that demand is "still quite strong". But although tenants can be found, rents have been falling, she said. An executive apartment used to go for $2,700 or $2,800 a month; now, the rate is $2,500.
The one bright spot is that falling rentals have boosted activity in the market so far this year.
There have been more rental deals, with 8,485 in the January to March period and 8,455 in the April to June period.
This is up from an average of 7,580 a quarter last year and 6,780 a quarter in 2012.
Woodlands, Jurong West and Tampines have seen the most rental transactions in the past month, based on an STProperty "heat map" using HDB data.
One reason for the flurry of activity is that low rentals have attracted more tenants, said R'ST Research's Mr Ong.
Landlords have had to offer low rentals to compete for tenants, whose numbers have been affected by foreign labour curbs. The surfeit of flats for rent also means tenants can pick and choose.
"Nowadays, tenants can be fussy," said a 32-year-old safety officer who wanted to be known only as Mr Chandran. He has been trying to rent out his four-room flat near Ang Mo Kio MRT station, but has received just one call in the past fortnight.