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RENTS of HDB flats eased at a bigger pace year on year (y-o-y) in March 2017 compared with rents of non-landed private homes, according to latest flash estimates from SRX Property.
On a month-on-month (m-o-m) basis, rents for both categories fell.
SRX's rental index for private apartments and condos fell one per cent m-o-m in March - contrasting with a 0.7 per cent rise m-o-m in February.
The index has shrunk 3.9 per cent y-o-y from March 2016 and is also 19.1 per cent below its peak in January 2013.
Giving a finer split by geographical region, SRX said that the sub-indices for the prime areas or Core Central Region (CCR), city-fringe or Rest of Central Region (RCR) and the suburbs or Outside Central Region (OCR) all posted y-o-y drops of 3.9 per cent, 3.7 per cent and 4.1 per cent respectively.
An estimated 4,549 non-landed private homes were rented last month, up 14.6 per cent from 3,971 units in the preceding month. Year on year, the rental volume in March 2017 was 1.3 per cent lower than the 4,611 units in March 2016.
In the HDB flat segment, SRX Property's rental index eased 0.5 per cent m-o-m in March 2017, the same percentage drop as recorded in February 2017. The index was 4.7 per cent lower y-o-y compared with March 2016 and also 13.9 per cent below its August 2013 peak.
SRX Property estimates that 2,045 HDB flats were rented last month - an increase of 32.3 per cent from the previous month's 1,546 units but a drop of 7.5 per cent from a year ago.
Savills Singapore research head Alan Cheong said that the rental market for HDB flats may take a longer time to recover fully compared with private apartment and condo rents.
"The rate of rental decline appears to remain rather stubborn at levels significantly below zero per cent, on a m-o-m basis, especially in the case of four-room and three-room HDB flats."
This suggests that the malaise facing the HDB rental market is more broad-based and has a stronger momentum than the non-landed private residential sector, he added.
"HDB rents are expected to remain soft in 2017 as the lower end of the Employment Pass, S-Pass and Work Permit economy continues to be beset with lower demand for workers," argued Mr Cheong.
Private apartment and condo rents are expected to remain soft at least till the end of this year - with the high-end segment likely to bear the brunt of a soft expatriate leasing market with rents contracting 5-10 per cent.
"Rents in the RCR and OCR are expected to decline by 3 per cent and 5 per cent respectively," he said.
Nevertheless, rents should start to build a base by the end of 2017 as the pace of new private home completions falls sharply in 2018. "The point of inflexion for rents in the private non-landed residential sector may however only come in mid-2018."
The Business Times