Market watchers believe that the measures deployed to combat COVID-19 pandemic is the reason for the sudden increase in demand in March in the quiet rental market for private condominiums/apartments and Housing Board flats.
Compared to February with 4,730 leased units, there was a 10.9 per cent increase in the private rental market, reaching 5,244 leased units. This is based on the flash data released by SRX Property, a real estate portal.
From a year-on-year comparison, rental volume in March was 5.9 per cent less but it was 7.6 per cent more than the five-year average volume for the month.
In March, leasings increased in the HDB rental market by 15.4 per cent to 2,157 flats compared to 1,869 in February. However, HDB rental volumes declined 11.3 per cent compared to March last year. Compared to the five-year average volume for the month, HDB rental volumes were 4.7 per cent lower.
According to Christine Sun, the Head of Research and Consultancy of Orange Tee & Tie, there are several factors why the rental volume rose.
Ms Sun explained that existing tenants who were reluctant to find new dwellings may decide to renew their contracts to minimize the risks of contracting the virus. As for those who came back from abroad, they may have needed a dwelling to stay at to complete their stay home notice.
She added that some Malaysian workers could have quickly snagged a rental house prior to the lockdown in Malaysia, whereas others scrambled to get a rental place prior to the implementation of the circuit breaker measures in Singapore.
Despite the bleak property market sentiment due to the pandemic, rents for private condos and apartments rose 0.2 per cent, as shown by the SRX data. Some landlords could now want higher asking prices, thus leading to a sudden increase in rental demand, Ms Sun opined.
She additionally remarked: “However, we have also observed that some landlords gave rebates or discounts to help their tenants whose livelihoods have been affected by Covid-19.”
Compared to March last year, private rents rose up 3.2 per cent whereas declined by 15 per cent compared to their peak in January 2013.
HDB flats experienced no increase in March, unlike private apartments. Rather, the rents of HDB flats fell 0.5 per cent month-on-month. A possible reason is that the higher short-term demand for rental units is outstripped by the higher supply of HDB flats eligible for rental after the minimum occupation period.
Also, HDB rents increased 1.5 per cent year-on-year, but they were still 13.7 per cent lower than their peak in August 2013.
The rental market in the country will suffer if the pandemic situation worsens, leading to a temporary decline in foreign employment.
Ms Sun concluded that “There could be some downward pressure on rental prices and leasing volume. We estimate that rents may dip up to 3 per cent for the whole year in the worst-case scenario.”