Gap between demand and supply in rental market narrows
Landlords in these traditionally popular locations have adapted to a change in demand that has been markedly reduced from the previous year.
According to the latest data available from the government, the average rent of residential properties in private hands rose by 0.8 percent in Q3, which is slower than the 2.8% rise in the previous quarter.
Rent increases for non-landed properties decreased to 0.2 percent from 2.3percent in the prior quarter. Rents for landed properties increased by 4.4 per cent, a slight decrease from the 6.7 percent increase in Q2.
PropertyGuru’s rental demand for public housing fell by 14.7% in Q3 compared to the previous quarter, while rental supply increased 7.8%. Even so, HDB flats’ asking rents rose by 3.5 per cent during the same time period.
Rentals for residential properties will continue to decline, as the demand for housing has slowed and new homes are being built.
PropertyGuru’s market report published on Thursday, Nov 16th, showed that the rental demand for all listings on their portal fell by 10.4% in Q3.
In Q3, the overall rental supply (based on all of PropertyGuru’s rental listings) rose by 11.3%.
Overall asking rents fell by 2.5% from Q2, the second consecutive quarter in which they declined.
This is a result of the rental market being less impacted by pandemic-induced demand. The reopening of land borders has allowed workers from Malaysia to no longer require temporary lodgings. Local households are moving into their newly constructed homes at a faster rate as more houses are completed.
In Q2, a number of projects received temporary occupation permits. The Woodleigh Residences (667 units), Affinity Serangoon (1052-units) and Riverfront Residences (1472-units) are just a few of the projects which received their temporary occupation permits. With the first-quarter completions, there are enough units to meet demand.
Around 9,000 residential units were completed in the third quarter, excluding executive condominiums. This is the highest number since Q2 2016, when a total of 9,000 units was completed. In Q3, the number of private residential units, excluding executive condos, was also completed at around 9,000 – the highest quarterly completions since Q2 2016.
Due to the rising cost of private property, some tenants may have decided to look at more affordable HDB rentals.
Renters who rent out an HDB apartment or a single bedroom are also less likely than private housing owners to feel financial pressures to reduce their rental rates. The smaller amount of loan or the fact that they are less affected than private homeowners by increasing interest rates could explain this.
The market for private non-landed properties appears to have reached its peak. Rents asked were 4% lower in Q3 than they had been the previous quarter.
It follows a recent influx in the number of new homes available to rent.
Expect about 20,400 new private homes to be finished this year. This would be the largest annual completion of supply since 2017.
8959 more units are expected to be completed by 2024. As the supply continues to increase and domestic demand lessens, asking rents are expected to soften.
According to property type, rents for landed properties fell by 7.6 per cent from the previous quarter in Q3. PropertyGuru data revealed that the asking rents of non-landed properties fell by 4 per cent.
Orchard Road is closely followed by Eunos/Paya Lebar in terms of a noticeable easing in the asking rents.
The portal’s data revealed that the median asking rents of the Eunos/PayarLebar and Orchard region fell by approximately 6 per cent compared with the previous month.