The full article can be found in Lianhe Zaobao, Finance Section, Page 38, 9 August 2018. Exclusively written by SLP Research & Consultancy Department.
On Wednesday, 8 August 2018, real estate portal SRX Property released flash estimates on the rental trends for private non-landed residential properties and Housing and Development Board (HDB) flats in July 2018. The overall rental index for condominiums and private apartments continued to stabilise in the past 12 months, while the rental index for HDB flats increased marginally in July 2018.
The flash estimates show that the rental index for non-landed private homes was unchanged in July. Meanwhile, the rental transaction volume rose slightly by 4.7 per cent month-on-month to 4,896 units in July. In the HDB rental market, the rental index increased by 1 per cent in July and volume recovered with an 11.9 per cent month-on-month jump to 1,932 flats.
Speaking to Lianhe Zaobao, ZACD Executive Director and Chief Investment Officer, Nicholas Mak said that the residential leasing market continued to show signs of stability in the short term.
He added that the number of new private housing units that would be completed next year, is not huge and the market should be able to absorb the new supply, which will help the leasing market to stabilise for the rest of this year and next year.
In response to whether the recent collective sale fever will affect the leasing market, Nicholas Mak feels that the impact will not be as significant compared to the previous collective sale bull run, which occurred from 2005 to 2008 – whereby the number of en bloc sale projects transacted then were much bigger than that in the recent 2017 to 2018 bull run.
Furthermore, most of the transacted en bloc sale projects then were in the prime and city fringe areas, which were popular with most residential tenants. Therefore, the previous en bloc sale bull run resulted in the displacement of many tenants who had to move to other housing units for lease, increasing the leasing demand significantly.
The recent collective sale fever will not be as impactful as the volume is smaller than the 2005 to 2008 bull run. In addition, some of the largest transacted en bloc sale projects were privatised Housing and Urban Development Company (HUDC) estates that are mostly owner-occupied. Hence, this round of en bloc sales would only provide a temporary boost in the residential leasing market.