Landlords’ profits continue to shrink as private condo rents slip 5.3% in October

Rents have been falling for 9 straight months.

Renting out a flat is no longer as lucrative as it used to be. Private condo rental prices continued to fall in October, with rents slipping 5.3% year-on-year.

According to the SRX Non-landed Private Residential Price Index for Rentals, rents dropped in all sectors in October. On a month-on-month basis, rents posted a drop of 0.9% in October compared to September. Non-landed Private Residential units in CCR, RCR and OCR saw rent cuts of 0.7%, 1.1% and 1.5% respectively.

Rental volume also dropped slightly. An estimated 3,208 private condo units were rented in October, representing a 1.3% decrease from 3,250 units rented in September. However, on a year-on-year, rental volume last month is 11.8% higher compared with 2,869 units rented in October 2013.

A report by Square Foot Research showed that overall rental yields remain at one of the lowest levels in a decade, with rental yields hovering at 3.5%, considerably lower than the 4.8% peak yield last recorded in 2008. 

“As we would expect, high-yield properties are mostly 99-year leasehold and are located in the mass market districts, where capital values are lower. Take note of the supply that is currently under construction, especially districts that will see large swings in completed units come 2014/2015. If rental demand stays the same or dips, especially in view of the slowing of the inflow of immigrants, the downgrading of Singapore's GDP forecast, and the depressed economic situation that could lead to another global downturn, a higher supply of completed units leads to a higher level of competition over a limited pool of tenants, resulting in a fall in rental rates,” noted Square Foot Research.