Tenants may find lower rents for condo units as vacancies rise

A higher supply of private properties has weighed down rents, as over 29,000 homes were completed in 2022 and 2023.

Tenants may alter their priorities and preferences soon. It is imperative for landlords and property owners to be cognisant of the market changes and adjust their strategies accordingly. Being aware of current trends and adjusting prices may help mitigate the risk of prolonged vacancy periods and navigate the market challenges successfully.The private rental market has softened rapidly, prompting more landlords to accept lower rents in lieu of leaving their units vacant in recent months.

The steepest decline in private condos was observed in the prime core central region , which fell by 5.6 per cent from the third quarter of 2023 to the first two months of 2024. This was followed by the suburbs, or outside of central Region , at 5 per cent, and the city fringe, or rest of central region , at 3.3 per cent.

Median rents for three-room flats experienced the highest increase, with a 12 per cent jump in the first two months of 2024, compared with during the same period in the previous year. Similarly, there was a rental growth of 10 per cent for four-room flats, 9.1 per cent for executive flats, 5.5 per cent for five-room flats, and 4.5 per cent for two-room flats, based on rental caveat data from HDB.

Additionally, the number of HDB flats that have fulfilled their five-year minimum occupation period requirement has decreased, resulting in a lower number of flats available for rent. In particular, the number of MOP flats fell from 30,920 units in 2022, to 15,549 in 2023.The rental price gap between HDB flats and condos has been narrowing. More tenants may move back to condos, which may pave the way for a gradual private rent recovery.

If we compare rental prices, the gap between HDB flats and condos has closed. In the third quarter of 2023, the median monthly rent for private homes, at around $4,550, was $1,450 more than the median monthly rent for HDB flats at $3,100. However, in the first two months of 2024, the rent gap between private homes and HDB flats tapered to $1,200.

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