As vacancies increase, tenants may see lower condo rents

The difference in rental prices between Housing Board flats versus condos has shrunk significantly. The rents of private flats have been falling for more than six months while HDB rentals have remained steady and even reached a new high during the same time period. The market performance of the two housing types has been affected by this discrepancy.

If these trends continue to grow, renting a home could become more attractive than renting a HDB flat. This is especially true if tenants are willing and able to give up some space for the privacy that comes with a home.

Tenants’ priorities and preferences may change soon. Landlords, property owners and other stakeholders need to adapt their strategies in response to market changes. They can reduce the risk of long vacancy periods.

Rents have been lowered by more landlords in order to avoid their units being vacant. Two years ago, a home could be leased in a week if it received more than 20 daily viewings. It can take two to three month to lease out a property. Some units, especially the older ones or those that are poorly maintained, may remain unoccupied for more than six months.

Rents have fallen due to the increased supply of private homes, which has been completed in 2022-2023. The situation was further worsened by a sharp drop in demand from locals after they moved into their new homes. The market has also been affected by a decline in demand from expatriates, due to the restructuring of multinational corporations, technology firms, start ups, and financial institutions over the last year.

Data from the Urban Redevelopment Authority show that after peaking in 2023’s third quarter, the monthly median rents of condos are on the decline. They dropped from $4.550 to $4.500 in 2023’s fourth quarter, and then to $4.300 in 2024’s first two months.

Rents for private condos fell the most in the core central region, or CCR. They dropped by 5.6% between the third quarter of the year 2023 and the first two months in 2024. The suburbs or outside of the central region (OCR) followed at 5%, and then the city fringe or rest of the central region at 3.3 %.

Some districts saw a steeper decline in median condo rent than others. District 5 (Pasir Pantjang, Hong Leong Garden and Clementi New Town), for example, saw its median rent drop by 10.9 percent, from $4.600 in the third-quarter of 2023 to $4.100 between January and February 2024. District 13 (Macpherson and Braddell), however, saw its median rent drop by 9.1 percent, while Districts 18 (Tampines, Pasir Ris), District 4 (Telok Blangah) and District 5 (Clementi New Town) experienced a 7.7 percent decline.

District 10 (Ardmore Bukit Timah Holland Road Tanglin) has seen the largest drop of 6.9 percent, from $6.900 to $6.425, during the same time period.

HDB rental prices are rising at a slower pace than the private market. According to’s flash estimates, HDB rents are increasing gradually and will reach an all-time peak in February 2024.

The median rent for three-room apartments saw the biggest increase, with a 12-percent jump in the first half of 2024 compared to the same period last year. Based on HDB rental caveat data, the rental growth for four-room apartments was 10 percent, for executive apartments it was 9.1 percent, for five-room apartments, 5.5%, and for two-room apartment, 4.5.

The Continuum Singapore District 15

To date, 43 HDB flats have been leased at least $6,000 a month, and two units are rented for more than $7,000 a month. The highest monthly rental of $7,600 for a 5-room flat in Tanjong Pagar Plaza’s central area was recorded in November 2023. In September 2023 a five room flat located in Pine Close in Geylang was rented for $7,400 a month.

The HDB rental market has been growing steadily and in some locations, rents are at new highs. The reason for this is partly due to the high demand for HDB apartments and the limited stock. HDB flats are still cheaper than private homes whose rents rose due to inflationary pressures, and taxes.

The number of HDB apartments that have met their 5-year minimum occupancy period (MOP), has also decreased, which means fewer units are available to rent. The number of MOP units fell from 30,920 flats in 2022 to 15,549 flats in 2023.

The gap in rental prices between HDB flats versus condos is narrowing. The rental price gap between HDB flats and condos has been narrowing.

The number of flats that were leased for higher prices declined in 2024, despite the fact that overall rents reached new heights. This indicates that less tenants are willing pay higher rents to HDB flats and have probably sought alternatives on the private market.

In the first two month of 2023 157 apartments were leased at a minimum monthly rent of $4,500, while only 114 were leased in the same period of 2024. The number of flats that were leased at a monthly rent of at least $4,500 fell from 60 units to 21 during the same time period.

Comparing rental prices, we can see that the gap between HDB apartments and condos is closing. In the third quarter 2023, private home rents were $1,450 higher than HDB flat rents, which was $3,100. In the first two month of 2024 the gap between HDB flats and private homes narrowed to just $1,200.

Some tenants will opt to rent smaller condos with two or three bedrooms in the suburbs as private rents increase. According to transactions from the first two month of 2024 the median rent for a suburban two-bedroom apartment was around $3600. This is similar to the rental rate for an executive or five-room flat at about $3500-3600.

Between January and February 20,24, tenants who require a 3-bedroom unit could lease smaller units between 800 sq ft and 1,200 sq. ft for as little as $4,000 or less. These units are located in Districts 26 (Upper Thomson and Springleaf), 17 (Loyang and Changi), 28 (Seletar), 23 (Hillview Dairy Farm Bukit Panjang Chua Chu Kang), 27 (Yishun Sembawang) as well as Districts 23 (Hillview Dairy Farm Bukit Panjang Chua Chu Kang), 28 (Seletar) or District 27 (Yishun Sembawang).

The market could experience a change in tenant behavior as the gap between HDB and private rents closes. Some tenants may decide to return to the HDB market while others might move to prime locations from the city fringe.

HDB’s rental market may be under some pressure due to the impending competition. A significant price correction is still possible, due to the limited number of MOP units. This will fall to 11,952 units by year-end.

The demand for larger apartments is expected to continue to be strong due to the relaxation in the occupancy cap. This allows up to eight individuals who are not related to live together in one unit.

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