Property cooling measures could increase demand for rental housing: analysts

Jan 12, 2022

RENTAL volumes for both Housing Board flats and condominium units recovered slightly in 2021 after falling in 2020 as a result of the Covid-19 pandemic, according to flash figures released by SRX Property and on Wednesday (Jan 12).

A total number of 58,613 condo units were rented out in 2021, 6.8 per cent higher than the amount recorded in 2020. Meanwhile, the full-year rental volume for HDB flats stood at 21,924, up 4 per cent from the year-ago period.

The rental market will likely be well supported in 2022, undeterred by the recent property cooling measures introduced in mid-December, property analysts have noted.

"On the contrary, the property curbs could increase the demand for rental housing," said Nicholas Mak, head of research and consultancy at ERA.

The increase in additional buyer's stamp duty (ABSD) will incentivise homebuyers who already own a property to sell their existing properties before buying the next. If the next property is under construction, homebuyers will need to rent while waiting for completion.

Furthermore, the addition of more vaccinated travel lanes (VTL) would result in higher foreigner arrivals thus expanding leasing demand, Mak noted. As a result, the rental rates of private and public housing are expected to continue to increase.

Condo price growth is expected to be more moderate after the cooling measures, Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie.

"Some landlords may hold back on the sale of their units. They could be waiting for prices or market sentiment to recover. In the meantime, some may lease their units instead, especially since rental demand is still strong and rents have been rising," she added.

For the month of December, condo rents climbed 1.1 per cent month on month, but were down 6.7 per cent from the peak recorded in January 2013.

All regions saw rents climb on the month, with rents in the outside of central region (OCR) registering the highest growth at 1.7 per cent. City fringe or rest of central region rents (RCR) were up 0.9 per cent, while rents in the core central region gained 0.6 per cent.

Year on year, condo rents rose by 11.4 per cent, with rents in the CCR, RCR and OCR rising 11.6 per cent, 10.1 per cent and 12.3 per cent respectively.

HDB rents rose 1.4 per cent month on month in December. Mature and non-mature estate rents gained 0.1 per cent and 2.8 per cent respectively, while 3-room, 4-room, 5-room and executive rents rose by 0.8 per cent, 1.9 per cent, 0.8 per cent and 1.1 per cent respectively.

Year on year, overall rents were up 10.4 per cent, but were 3.8 per cent lower than the peak recorded in August 2013.

Mature and non-mature estate rents advanced by 8.3 per cent and 12.5 per cent respectively from December 2020. All room types recorded rent increases - 3-room flats by 8.9 per cent, 4-room flats by 10.2 per cent, 5-room flats by 11.2 per cent and executive flat rents by 8.8 per cent.

As for rental volumes, condo leasing fell for the second straight month, easing 1 per cent on the month and 4.4 per cent on the year. That being said, rental volumes were 9 per cent higher than the 5-year average volume for the month of December.

By region, a majority of condo leasing was from the 39.7 per cent, 30.7 per cent from the RCR and 29.6 per cent from the CCR for December 2021.

Meanwhile, HDB rental volumes were nearly flat year on year, registering a 0.2 per cent growth. Volumes were were also 1.2 per cent lower than the 5-year average volume for the month of December.

By room type, 37 per cent of HDB rental volumes were from 4-room flats, followed by 34.2 per cent from 3-room flats, 23.9 per cent from 5-room flats and 4.9 per cent from executive flat.s

"The tightening of border measures to slow down the import of Omicron cases probably led to a decline in the rental volume in December 2021," said Mark Yip, chief executive of Huttons Asia.