The sharp fall in rental volumes could signal the start of a "domino effect" for the rental market.ST PHOTO: LIM YAOHUI
Rents for Housing Board flats and private apartments held steady in August but leasing took another big hit, with rental volumes falling to levels lower than during the circuit breaker period, going by flash data from real estate portal SRX Property on Wednesday (Sept 9).
August leasing for private condominiums and apartments tumbled 20.4 per cent month on month to 2,716 units. This is 47 per cent lower than a year ago and 42 per cent less than the five-year average volume for the month of August.
The rental volume for HDB flats in August also fell, by 16.7 per cent from July to 1,025 flats. This is 46.2 per cent lower than a year ago and 44.1 per cent below the five-year average volume for that month.
The sharp fall in rental volumes, which was also seen in July, could signal the start of a "domino effect" for the rental market, which has been hampered by an economic slowdown and rising unemployment among foreigners in Singapore, said Ms Christine Sun, head of research and consultancy at OrangeTee & Tie.
Pointing to the job support schemes intended to help firms retain their Singaporean workers, Ms Sun added that it is "inevitable" that the reduction in foreign employment will adversely impact the leasing market temporarily.
ERA Realty head of research and consultancy Nicholas Mak agreed, and said that dampened demand in both the HDB and private housing market may be due to weakness in the wider employment market, which has seen job losses for some expatriates.
This wider decline has not been offset by the increase in rental demand for HDB flats from Malaysian workers looking for affordable accommodation near their workplaces following the implementation of border restrictions between Malaysia and Singapore due to Covid-19.
SRX flash data also showed that private apartment rents remained unchanged in August from the previous month, while HDB rents saw a small uptick of 0.3 per cent within the same period.
Year on year, overall rents for private apartments in August were down by 1 per cent from a year ago and 17.3 per cent off their peak in January 2013.
For HDB flats, rents slipped by 0.1 per cent from August last year and were 14.6 per cent lower than their peak in August 2013.
Although the SRX rental index held steady for the private residential market in August, Ms Sun noted that rents have been falling for six consecutive months for luxury homes in the prime districts or core central region. Rents have also slipped marginally in the outlying areas or outside of central region.
"The trends may indicate that more expats are moving out from prime locations to suburban areas or city fringe areas, where housing tends to be more affordable in the light of the current economic slowdown," she said.
Rental vacancies may increase in the coming months, possibly exerting some downward pressure on rents for certain locations, she said.
As for HDB rents, said Mr Mak, the 0.3 per cent month-on-month increase comes as a significant number of relatively new HDB flats completed the five-year minimum occupation period this year and could be available for lease.
These newer flats would command higher rentals compared with the older flats in the vicinity.
As more of such newer flats enter the leasing market, they could support or even increase the overall HDB rental index, he added.