Rents for HDB flats are expected to remain depressed for the rest of the year, on the back of sluggish demand and rising supply of flats, said property analysts and reported in the media.
Notably, real estate data show that HDB rental index dropped 2.3 percent since early 2014, hitting a three-year low in July with the median rent at $2,300.
Property analysts note that this is just the beginning of a continued slowdown.
Eugene Lim, Key Executive Officer at ERA Realty expects rents to drop a further five to six percent by year end, while R’ST Research director Ong Kah Seng sees a full-year decline of five to seven percent. Nicholas Mak, Research Head at SLP International expects a four to six percent drop.
For the longer term, Christine Li, Research Head at OrangeTee, expects a drop of around 10 percent by end-2015.
Property agents attribute the problem to a lack of demand due to a shortage of tenants.
In fact, landlords have reduced rents to compete for tenants, whose numbers have been limited due to foreign labour curbs. The surplus of flats for rent also provides tenants with more options to choose from.
“Landlords are realistic as the market is not doing very well,” said Noel Lu, an ERA Realty agent.
The worst-hit areas are those without easy-access to amenities, like public transport.
However, ERA agent Zola Tan noted demand continues to hold up in mature estates as well as those near MRT stations.
Meanwhile, competition is expected to further increase as more suburban private homes are expected to be ready next year, said Ong.
Muneerah Bee, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email muneerah@propertyguru.com.sg
