Grim news for investors of private homes: According to market watchers, rents have been steadily sliding – a result of the abundant supply of homes flooding the market this year. Experts estimate an increase in supply of 62.1% over last year. In 2012, the number of completed private homes was 10,329 units. This year, supply is predicted to reach 16,742. In the past six months alone, five large-scale suburban housing developments were completed, noted Mr Eugene Lim, ERA key executive officer. Landlords have to resort to cutting rents to attract tenants. This is happening for new and old residential projects alike. For example, NV Residences in Pasir Ris, which obtained TOP in January, have landlords of three-bedroom units reducing rents from $4,000 a month to below $3,500 a month, observed Mr Chris Koh, director of property consultancy Chris International. Mr Koh further added that older projects like Dakota Residences in Old Airport Road, which attained TOP in 2010, also have their asking rental rates lowered. A three-bedroom unit there could be had for $4,700 to $5,000 now, compared to $5,000 to $5,200 previously. On a more positive note, take-up rates for rental housing have gone up, and by a brisk 16% in the second quarter from the previous quarter, data from CBRE Research revealed. Nevertheless the rental indices from the Urban Redevelopment Authority (URA) show that rental rates have indeed slowed for the second quarter.

Table 1: URA Rental Indices from 1Q2012 - 2Q2013

Source: URA For 2Q13 the increase in the index is a mere 0.31%, the lowest since 2Q12.  

Table 2: URA Rental Indices by Regions from 1Q2012 - 2Q2013

Source: URA Going a step farther, based on URA rental indices by region, the city or Core Central Region (CCR) has the highest quarter-on-quarter growth (0.48%) among the three regions. Interestingly this is diametrically opposite to the price index for non-landed homes in CCR, which declined by 0.2% - the sole decline for the three regions in 2Q2013. In contrast, the rental index for city fringe, RCR, shows a 0.12% growth, surpassing the previous quarter growth of 0.06%. Finally for the suburbs, OCR, there is no change in its rental index quarter-on-quarter. Again this is the opposite case to the price index for non-landed homes in OCR, which rose by 3.8% - the highest amongst the three regions for 2Q2013. From the figures there is a negative correlation between the rental indices and the price indices for non-landed homes: For the region which price index rise by the most, the corresponding rental index will increase by the least. Copyright ® - All articles are the copyright of www.propertybuyer.com.sg and CoreConcept Systems Pte Ltd and the company reserves full rights to use, reuse in any form or in any media with or without attributing authors or supplanting the name of one author with another.

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