HDB rents rally 1.2%, condo rents dip 0.2% in 2020

Weak hiring prospects and lack of demand for foreign workers weighed on prices.

HDB rental prices rose 1.2% for the whole of 2020 whilst condo rent prices dipped slightly, as the pandemic hit on hiring prospects and weighed on foreign worker demand.

Condo rents fell 0.2% in 2020, a decrease following the 4% rise in 2019, according to data from the SRX.

Rents in the Core Central Region (CCR) and Rest of Central Region (RCR) dropped by 2.6% and 0.5%, respectively, over the course of the year. In contrast, rents of condos in Outside of Central Region (OCR) rose 1.4%.

For the month of December, condo rents decreased 0.3% from November 2020, with CCR and OCR rents decreased by 0.4% and 0.6%, respectively whilst RCR increased by 0.1%.

A total of 52,333 rental transactions were recorded for the whole year, 11.4% YoY lower than the total in 2019.

The pandemic seemed to have reversed a decade of rampant growth in rental demand, notes Christine Sun, head of research and consultancy, OrangeTee&Tie.

“Owing to the rising foreigner unemployment, weak hiring prospects and travel restrictions, the total rental transactions for the whole of 2020 were lower for both the private residential and HDB markets when compared to 2019,” Sun added.

An estimated 4,414 condo units were rented in December 2020, slightly lower than the 4,193 units rented in November 2020. However, this is 15.4% higher than the five-year average volume for the month of December.

Broken down by region, 37.4% of the total volumes are from OCR, 35% from RCR, and 27.7% from CCR in December 2020.

In contrast to private home rents, HDB rental prices rose 1.2% for the whole of 2020, slightly lower than the 1.4% rise in 2019. This was driven by rents for 3 room, 4 room, and 5 room units rising by 2%, 1.5%, and 0.6%, respectively, over the period. In contrast, executive rents fell 3.1% in 2020.

For the whole year, a total of 20,501 rental transactions were recorded, 15.3% lower than the total HDB rental deals done in 2019.

Volumes were also 4% lower in December 2020 compared to the same month in 2019, with an estimated 1,774 HDB flats rented during the month. However, this is 9% higher than the 1,627 units rented in November 2020.

For the month of December, HDB rents edged up 0.4% compared to November, driven by an increase in rents of 3 room (1%), 5 room (0.2%), and executive units (0.4%). Four room rents remained unchanged over the same period.

By room type, in December 2020, 36.8% of the total volumes were from 4 Room, 35.1% from 3 Room, 23.5% from 5 Room, and 4.7% from executive.

Sun noted that rental demand may be rising as more overseas Singaporeans, PRs, and long-term pass holders have reportedly returned to Singapore in recent weeks.

“Some of these people, especially those who had been overseas for a while, require short-to mid-term accommodation upon their return or as they scout for a more permanent place. We have also observed more overseas students looking for accommodation during this period of time,” Sun said.

She added that some locals who have just sold their private homes, or flats, have also rented a unit in the interim as they wait for the completion of their new place.

Looking forward, Sun expects rents and volumes to improve if governments around the world gain better control of the pandemic situation and air travel resume substantially this year.

“Mass vaccination programs launched across the global and Phase 3 reopening may lend some support to the leasing market this year,” she noted.

She adds that private rental volume may rise slightly to around 85,000 to 95,000 units whilst rental prices may trend between a 1% decrease and 2% rise in 2021.

Meanwhile, for the HDB rental market, the rental volume may increase slightly to 42,000 to 44,000 units whilst rents may rise by up to 3%.