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Sharp Rise in Condo and HDB Rental Rates in February Amid Falling Volumes


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According to flash estimates from SRX and 99.co released on March 29, condominium rental prices rose by 3.5% in February, a significant increase compared to January's 1.4% rise. This marked the highest monthly increase in condo rents in a year, surpassing growth rates observed since February 2022. Meanwhile, Housing and Development Board (HDB) rents increased by 1.2% in February 2023, a larger rise compared to the previous month's 0.6% increase from December 2022.


According to Pow Ying Khuan, head of research at 99 Group, both the HDB and condo rental markets saw increases in rental rates despite declining volumes. While condo rentals recorded a larger increase than HDB rentals in February, Pow suggests that renters may turn to the HDB market for more affordable options if prices continue to rise as volume declines, particularly as there are more newly completed condo units in the market compared to last year.


Meanwhile, Christine Sun, Senior Vice-President of Research and Analytics at OrangeTee & Tie, noted that some tenants have opted for cheaper locations such as suburban areas or more affordable housing options like HDB flats instead of accepting higher rents. This trend could explain why rental rates rose the most in the Outside of Central Region (OCR) last month.


Nicholas Mak, an observer of the real estate industry, noted that there are fewer HDB flats reaching the end of the 5-year Minimum Occupation Period (MOP) this year, which means that there are fewer newer HDB flats that could command higher rents.


In February, condo rental prices saw the steepest monthly increase in a year, with growth led by a 3.6% rise in the Core Central Region (CCR), a 3% rise in the Rest of Central Region (RCR), and a 4% rise in the Outside of Central Region (OCR).


On a year-on-year basis, condo rental prices increased by 36.2% in February, with rents rising by 35% in the CCR, 35.5% in the RCR, and 36.9% in the OCR.


In February, the estimated number of rented condos decreased by 18.6% compared to the previous month, with approximately 5,119 units being rented as opposed to 6,285 units in the prior month. This translates to a 0.6% drop in volume when compared to the same month of the previous year.


In terms of the regions, 36% of the condo rental volumes in February were from the OCR, 34.9% from the RCR, and 29.1% from the CCR.


For HDB rentals, there was a 1.2% increase in February compared to the previous month. Mature estate rentals rose by 1.7%, while non-mature estate rentals increased by 0.8%.


All room types saw an increase in rent, with three-room units increasing by 0.6%, four-room units by 1.8%, five-room units by 1.4%, and executive units by 1.8%.


Overall, HDB rents grew by 27.7% year on year, with mature estates increasing by 26.5% and non-mature estates by 29%. All room types also recorded year-on-year increases, with three-room rents growing by 24.1%, four-room rents by 29.3%, five-room rents by 29.2%, and executive rents by 31.4%.


In February, an estimated 2,619 units were rented in the HDB rental market, which is a 7.2% drop from January's 2,822 units. Year-on-year, volumes were also down by 4.1%. In terms of room types, three-room flats accounted for 33.6% of February's volumes, followed by four-room units at 36.1%, five-room units at 24.5%, and executive flats at 5.8%.


Sun highlighted that rental growth may start to slow down with a significant supply of new homes expected to enter the market in the second half of the year. However, landlords may still face high costs due to increased maintenance fees, property taxes, and mortgage payments, keeping rents high for the time being.


Eugene Lim, the key executive officer of ERA, also noted that HDB rental demand may decrease later in the year, as the rental index has been growing at a slower rate since December 2022. This could be an indication that rents are nearing their peak soon. With more Build-To-Order flats and private condominiums expected to be completed this year, people who have been renting HDB flats while waiting for their new homes may no longer need to rent.

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