Tenants calling the shots

Tenants are now calling the shots in the private apartment rental market. From lower rental prices and shorter leases to property renovations, some are even demanding specific furniture, new utensils and linen.

SeaHorizonEC

Photo: Sea Horizon executive condominium in Pasir Ris

Property rental prices have been coming down, especially as property prices have fallen over the last few years, and supply have increased substantially. Landlords are now finding it harder to find tenants willing to sign the standard 2-year leases which were commonplace in the past. Now most tenants are asking for shorter leases of 6 months as they know they are able to secure another place at a cheaper price should they wish to do so after the lease period. Private property rents have fallen 4.6 per cent in 2015, with rents in the outside central region (OCR) feeling the heat more with a 5.6 per cent fall. Rental prices of city fringe properties fell 4.9 per cent.

Property experts are expecting a 9 to 10 per cent vacancy rate this year, with rental prices falling 8 per cent. There will be approximately 26,467 new private property and executive condominium units made available this year, pushing supply up to an record high. Coupled with the authorities clamping down on immigration and a weak global economy, the prospects may seem a little dim. With investors and landlords not able to secure rental yields, the market may see an influx of units being sold; mortgage auctions may also find themselves having quite a few more units at hand.

Lull in private home prices

Despite a projected lull in local private home prices this year, interest in Singapore’s property market remains steady as prime residential property prices are still 165 per cent and 92 per cent lower than those in Hong Kong and London respectively.

 Photo credit: Singapore Tourism Board

So despite property analysts predicting a 5 to 10 per cent fall in prime and mass market private property prices this year, the local property market’s core remains strong. 2010’s property cooling measures may have kept property prices 17 per cent lower than what it could have been. Private home prices have fallen 4 per cent last year, following a 3.7 per cent fall in 2014. In the luxury home market, prices have fallen 20 per cent since the Additional Buyers’ Stamp Duty (ABSD) was implemented in 2011.

China’s recent growth slump, plunging oil prices, the Federal Reserve interest rate hike and a general sense of a global recession looming, might consequently affect the property markets around the world. Businesses may reconsider their expansion plans, which could mean a fall in demand for office spaces and commercial properties. This in turn may affect the number of expatriates entering the country, which may also affect rental prices.

This year could prove tough for investors and property sellers, but not without glimpses of hope. 2016 may be the year to hang-in-there, but industry experts are expecting 2017 to take a turn for the better.

Private property prices remain level

The NUS Singapore Residentail PRIce Index (SRPI) showed a 0.1 per cent rise in private non-landed home prices in September. But property experts say it could simply have been a post-election response, when buyers might have held back to see if the property cooling measures would be removed. Now that the authorities have indicated the cooling measures are here to stay, at least for now, some buyers may have taken advantage of the already-lowered prices and closed some transactions.

The Scala condo Serangoon

Photo: The Scala condominium in Serangoon

The resale private home market in particular has benefited from the lack of new property launches in September. Non-central units rose 0.3 per cent while smaller units gained a 0.4 per cent footing. But as 2016 brings an onslaught of completed new properties, the resale market may have to brace itself for a bigger hit. Industry players are expecting home prices in the non-central regions to continue on a downward trend as the number of completed units there rise. Leasing may also prove difficult as there will be a huge leap in supply while immigration policies are now tighter, which implies a lower demand.

While recent figures point to tenants looking towards to the central regions for leasing prospects, high-end properties may be hitting a wall in both sales and leases as competition has lowered rental prices in the suburbs and more tenants are seeking options there. The property market seems to be reaching a standstill as the year draws close and the festivities take over, the real time to watch the market might be the first quarter of 2016, which will set the tone for the year ahead.

Tenants’ market as rents dip

Tenants looking for a private apartment with a good location may now have more options as more properties enter the rental pool.

Property analysts have noticed that while rental rates have fallen 5.6 per cent since 2014, the number of private properties leased have risen 17.7 per cent. Shorter 12-month leases instead of the usual 24-months are also now more in demand. Tenants are taking the opportunity to move around more, in search for better units. More are now looking inwards to the Central region, as they tend to consider these city centre units better value-for-money. Landlords are also now more willing to negotiate as they begin to recognise that competition will only continue to heat up in the months ahead. Now $4,000 may be able to get you a two- or three-bedder in an older establishment in the city centre when it would have cost you $5,000 before.

Oliv Balmoral

Photo: The Oliv @ Balmoral

In the suburbs, as more new properties reach completion, rental prices may continue to dip. Private property rentals are expected to fall 4 to 5 per cent this year.

In the HDB rental market, as the number of rental HDB flats rise due to more HDB flat owners moving into their ready-for-occupation new suburban homes, leaving their empty units available for subletting; there are now an increasing number of four- and five-room flats available for rent. Rental rates for HDB flats have fallen 3.2 per cent this year. As the year-end draws near, overall property prices seem to indicate a stabilising market but as rental demand and prices continue to fall, will it inherently affect next year’s prospects?

Resale property prices slide further

The private property market seems to be going the way property analysts have predicted in the beginning of the year. Over the last 6 months, prices of completed private property have fallen 1.9%. The steepest fall was in the beginning of 2014, at 3.7%. Though the decline has continued, the fall has been lighter in the quarters following.

Maysprings condoSince the implementation of the Total Debt Servicing Ratio (TDSR) in June of 2013, property prices have fallen at varying speeds over the past 2 years. A total of 42,606 new homes are expected to be ready for occupation within these couple of years and up to 96 per cent of the land sold this year are expected for future non-landed homes. It may become a tussle for prices and buyers, between new and resale properties.

As rental demand also continues to dip, prospects for the property market seems to have dimmed slightly, though select properties will still hold potential. Property experts have explained that the dip in prices in the resale market may have been due to the ability of individual to be flexible with prices. New properties which are being sold by developers have the means to stick to their guns in terms of pricing. The scale for rental supply and demand is likely to continue leaning towards the former.

Rental properties face price-pressure

Vacancy rates for private non-landed homes may reach 9.6 per cent by the end of this year, up 1.8 per cent from 7.8 per cent at the end of 2014. Since the beginning of 2013, rental rates have continually fallen on a monthly basis, with the exception of January this year. Property experts are expecting a further fall in rental prices in these next couple of years.

Duchess ResidencesProperty agents have also noticed that tenants are now signing shorter leases of 12 months as opposed to the usual 24 months. Tenants may be on the constant lookout for better deals are may change units more frequently. The number of new private homes have risen exponentially, especially as previously sold units reach completion and are readying themselves for occupation this and next year. This year alone, 21, 800 new units will be completed. That is almost 84 per cent higher than the 11,865 units in the last five years combined.

On the brighter side of things, the volume of rental transactions may remain steady as the tenant pool seems to stay constant albeit an increased likelihood of tenants making their rounds in the rental market. That may also mean a higher number of new leases being signed.

As long as the tenant pool remains the same, and the supply of new private homes continues to rise, the pressure on housing rental prices and eventually sale prices is here to stay.

Rising competition in the Rental market

If you were looking to buy a condominium unit to call home, competition from the rising number of new homes might be good news for you. But if you were looking to invest in a unit to reap rental profits, it might be wise to consider your options carefully.

Jupiter18 CondoThe rental market for suburban condominiums has been falling, especially as more new properties enter the market. Private condominium rentals have fallen 0.6 per cent last month and is 6 per cent lower than last May on a year-on-year comparison. More new condominiums will receive their TOP (temporary occupation permits) in the next few months, which may suppress the rental market even more. Property analysts are expecting a fall of up to 7 per cent for the private property rental market this year.

The effects may also trickle down to the HDB rental market as competition heats up across the board. The price gap may be narrowing between HDB and private apartment rents, thus giving tenants a much wider pool of options. A five-bedroom HDB flat now usually rents for up to $2,400 per month while a 2-bedder private condo unit rents at just under $3,000.

Location is still king and units in mature estates or near MRT stations will still command slightly higher rents.

Encouraging response from recent property launches

Over the weekend, show flats at two new condominium launches were packed to the rafters with eager buyers and those shopping for a good deal. Affordability and proximity to transport seemed to be the biggest crowd pleasers at these two developments.

Northpark Residences saw more than 70% of their 430 units sold with most of their buyers being Singapore citizens. Prices averaged at $1,300 psf. A 431 sq ft studio apartment for example, went for $612,000 while five-bedders with an average floor area of 1,432 sq ft sold at approximately $1.89 million.

Botanique @ Bartley2At the Botanique at Bartley, most of their units, about 70%, were all priced below $1 million. Definitely wallet-friendly for the middle-upper class household in Singapore and also more plausible for those who need a home loan. And they boasted the options of turning two- and three-bedders into dual-key apartments. Situated in the midst of quite a few schools such as the Paya Lebar Methodist Girls’ School (PLMGS), Maris Stella High School and the Australian International School, the property was quite the hot target for local and foreign buyers alike. Although only 300 units were put up for sale over the weekend, almost half have been sold. The most popular units were the one- and two-bedroom apartments starting at $598,000 for one-bedders and $798,000 for two-bedders.

If the weekend response and sales were anything to go by, the next few months may not be such dull ones. Is it time the property market picked itself off the floor, dust off and hit the road running? Will the positive effect rub off on older properties in close proximity to these new launches?