Rents are still rising but lesser homes being rented out
The private condominiums and Housing Board (HDB) flats continues to rise in February 2023. Although it seems that lesser homes are being rented out. Some tenants are resistant to the price increase noted analysts.
Rentals in the private condo market is increasing at a faster rate compare to the HDB flats. Condo went up 3.5% in February compare to January which was at 1.4%. This data was extracted from flash figures released by property portals 99.co and SRX. HDB rents went up 1.2% from 0.6% in January.
This new statistics marks 26th straight month of growth for condo rents and the 32nd for HDB. That being said, some property analyst said that recently real estate agents have reported a huge gap between landlords’ and tenants’ expectations.
Landlords' are facing higher cost
OrangeTee and Tie’s senior vice president of research and analytics Christine Sun said tenants are starting to resist rent increases. However landlords are staying firm on their demands. They are facing higher cost of maintaining the flat which comes from higher maintanence fees, property taxes and higher mortgage payments.
On the other hand, tenants are unwilling to pay more since rents have already risen considerably over the last year with some areas already reaching record highs.
She also said that The disparity has likely resulted in activity slowing down in February with lesser deals being closed in the last few weeks.
There was an 18.6 per cent drop in condo rents in February compare to January of 2023. Whereas for the HDB flat was a 7.2% decrease in the same period.
Mr Mark Yip chief executive officer from Huttons Asia said the reason for the steeper increase in condo rents in February could be because of new condo units being leased out. The newer condos usually gets taken up faster than older condos in the same area.
174 units which were leased out in February were from new condos compared to 140 units in the month before.
Mr Yip also said that condo and HDB rentals will continue to rise in light of the global economic uncertainties. However at a much slower pace of 10 to 15 percent in 2023 than the 30per cent hike in the previous year.
More houses to be completed
Mr Pow Ying Khuan head of research from 99.co group said that if condo rents continues to climb tenants will turn to HDB flats as they are the more affordable option. This in turn will push up cost and transaction activity in this area.
As more than 100,000 homes of private and HDB flats are to be completed in 2023 t0 2025 this may bring down the prices of the current rental boom.
An estimate of 18,000 units from 25 condos are to be available for key collection in 2023. More houses will enter the rental market as owners who bought them for investment will put their units up for rent.
And about 15,ooo HDB flats will complete the compulsory minimum occupation period in 2023. Which means more units will be available to be rented out.
Eugene Lim from ERA Realty said that those who have been renting due to waiting for their new houses to be ready will give up their lease. Hence freeing up more houses into the rental market and also to cool down the robust rental demand.
