WEAKNESS prevailed in the residential leasing market in November, going by an estimated 1.1 per cent month-on-month drop in private non-landed home rents and a 0.5 per cent decline in HDB rents.
Compared to a year ago, rents have fallen 5.6 per cent and 4.1 per cent respectively for private non-landed homes and HDB flats in November, flash estimates from SRX Property shows.
ERA Realty key executive officer Eugene Lim noted that most tenants are taking shorter leases to capitalise on declining rents. This is why despite the month-on-month dip in the number of private residential rental transactions in November, there were still more transactions inked compared to the same month last year.
An estimated 3,304 rental transactions involving private non-landed homes were inked in November, down 7.8 per cent month on month but up 12.6 per cent from a year ago.
"Going forward into 2016, we can expect rental volume to remain firm as more and more tenants go for 12-month leases, which translates to more frequent transactions," he said.
R'ST Research director Ong Kah Seng pointed out that intensifying competition among landlords and the seasonally weak year-end period have all contributed to the weakness in rents in November.
Two-year leases have become less popular this year, and the current standard preference is for one-year lease, or even 10-month lease, Mr Ong added. "Foreign professionals who have uncertainty in their placement in Singapore, or who have high possibilities to be relocated to help their headquarters in making inroads in emerging Asian markets, prefer short leases."
A significant jump in the increase in completed suburban condominiums recently also contributed to the more severe rental weakness in the suburban area or Outside Central Region (OCR) than elsewhere.
Year-to-date, private non-landed units in the OCR fell the most by 7.4 per cent, followed by 3.5 per cent in the city fringe or the Rest of Central Region (RCR) and 2.5 per cent in the Core Central Region (CCR).
In November alone, private non-landed units in the CCR, RCR and OCR experienced rental declines of 0.7 per cent, 2 per cent and 0.7 per cent respectively, according to SRX Property flash estimates.
"As there will be substantial private residential properties completed in 2015 and 2016, it is expected that average non-landed private residential rents will fall by about 5 per cent in the whole of 2015 and about 5 per cent in 2016 as well," Mr Ong said.
Depressed leasing conditions in the private residential market continue to weigh down the HDB rental market, consultants note.
Rents for transactions across all HDB flat types fell in November from a month ago - with three-room, four-room, five-room and executive flats marking rental declines of 0.5 per cent, 0.1 per cent, 0.7 per cent and 2.5 per cent respectively.
But HDB rental transaction volumes rose 6.3 per cent month on month in November to 1,822 flats - a 3.9 per cent uptick from November last year.
"Due to stiffer competition, HDB rents are expected to come under greater pressure going into 2016," Mr Lim said. But he added that transaction volumes should remain strong, given that even some expatriates have considered leasing an HDB flat in place of a private unit due to constraints in their relocation package.