Amid the Circuit Breaker Measures, the demand for rentals in HDB and non landed private residential fell last month with leases dropping by 36.7% and 36.5% respectively. The five year average volume for the month of april 2020 was 39.3% lower for HDB and 32.3% lower for non landed private residential.
6.6% Executive Flats, 26.5% Five Room HDBs, 36.1% Four Room HDBs and 30.8% Three Room HDBs. These made up the total rentals in April 2020 for HDBs.
Ms Christine Sun, Head of Research and Consultancy from Orange Tee & Tie’s said that the travel restrictions and border controls are the reasons for the declining rental volumes locally. The reduced number of foreign expats coming into Singapore to work due to tightening of Travel Restrictions by countries and also the coronavirus outbreak prompted many people from our neighbouring countries like Malaysia to stay in their home countries.
SRX estimates also painted the same picture for non landed private residential, with a 0.9% dip in rental prices. While for the HDB rental market, rental prices fell by 0.2%. But surprisingly, although the rents in mature estate fell by 0.9%, the rents in non mature estates rose by 0.7% instead.
Observers say that moving ahead, the rental market will face more challenges as companies cut or slow down on the hiring of foreigners and also with the Circuit Breaker in place, prospective tenants cannot visit the properties available for lease.
Mr Nicholas Mak, Head of Research and Consultancy from ERA Realty says that this situation will continue to impact the rental markets even after the circuit breaker is lifted as the employment market will be expecting to contract and there will be foreigners who will be losing their jobs. This will cause the rental demand to drop to a 2% to 4% year on year both in the private residential and HDB for year 2020. He also said that if not for the pandemic, non landed private residential rentals could have risen 1.5% to 3% this year.
He adds that this is due to the relatively low supply of completed private residential in 2020 compared with the annual supply in the last 10 years. Adding on to the fact is that Singapore’s employment market was stable with high employment rates before the Covid-19 struck.
*Author’s note; looking at the current real estate industry and coupled with this piece of news, rentals will still move, but it will be the one to three bedroom units that are of a more affordable price range. Those higher end and high rental priced properties might be at the short end of the stick.