Condo, HDB rentals rise in January as labour markets recover and border controls ease

February 16, 2022

SINGAPORE – The rental markets for Housing Board flats and private apartments continued to rise last month amid recovering labour markets as Singapore relaxes its border controls.

Condominium rents climbed by 1.6 per cent last month, while HDB rents rose for the 19th consecutive month, by 1.2 per cent, according to flash figures by 99.co and SRX Property released on Wednesday (Feb 16).

The rental growth for condominiums was observed across the board, in central Singapore, city fringes and the suburbs. Year on year, condominium rents were up 11.2 per cent from January last year.

Rental volume for the condominium market increased by 3.9 per cent to an estimated 4,646 units, compared with 4,472 in December. The biggest share of units rented was located in the suburbs, which made up 39.9 per cent of total rental volume.

Ms Christine Sun, senior vice-president of research and analytics at real estate firm OrangeTee & Tie, said the increased demand comes as rental activities picked up after the year-end holidays, as well as due to recovering labour markets, which expanded in the last three months of last year.

She pointed out that the number of non-resident workers grew for the first time in two years, with the Manpower Ministry reporting a 47,400 increase in total employment.

“Employment has also continued to grow in information and communications and financial services. The ramp-up in hiring will have a positive impact on the rental markets,” she said.

Meanwhile, rents for HDB flats in mature estate rose by 2.9 per cent last month, but rents in non-mature estates fell by 0.5 per cent.

Compared with January last year, HDB rents were 11.2 per cent higher.

More HDB flats were also leased last month, up by 2.4 per cent to an estimated 1,806 units, compared with 1,764 units in December.

Ms Sun noted that the substantial increase in international arrivals contributed to the demand for rental properties. This in turn drove up rents for HDB resale flats and condominiums.

Huttons Asia chief executive Mark Yip said the tight supply in both HDB and private rental markets continued to favour landlords last month, with larger units in demand from tenants looking for a bigger space to work from home.

Ms Sun noted that the new property cooling measures, which were introduced in December, could see more HDB upgraders selling their existing flats and renting in the interim.

The cooling measures include an increase in additional buyer’s stamp duty (ABSD) rate from 12 per cent to 17 per cent for citizens buying their second residential property, and from 15 per cent to 25 per cent for those buying their third and subsequent properties.

Ms Sun said of HDB upgraders: “This group of people will continue to contribute to the tenant pool in the coming months as more flats reach their MOP (minimum occupation period) and more HDB owners upgrade to private homes.”

ERA Singapore head of research and consultancy Nicholas Mak noted that demand from HDB upgraders contributed to a higher rise in rental rates for condominiums in the suburbs – 3.9 per cent from last November – while rates in the city fringes rose by 2.5 per cent and those in core central Singapore increased by 1.7 per cent.

“To avoid paying the hefty ABSD, some home buyers would sell their existing home before buying their next residential property,” he said.

“If their next home is still under construction, they will rent short-term accommodation… usually in the (suburbs).”

Ms Sun also expects more Singaporeans to move out of their extended family homes and rent, as work-from-home or hybrid work arrangements are likely to continue.

She estimated that the rental volume for condominiums will pick up by around 3 per cent this year, adding that rents may rise by 8 per cent to 11 per cent.

Mr Mak estimated that HDB and condominium rentals may rise by 8 per cent to 12 per cent this year. The record 35,000 HDB flats due to reach their MOP this year could command higher rentals than older flats in the same neighbourhood, he added.

Reference