At MortgageWise, we aim to provide our property investor clients with a snapshot of the performance of Singapore residential rental market regularly through our own basket of condos which provides more meaningful and personal insights than just a broad-based index from URA. Properties are not created equal and some will rise or fall more than the rest.
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The condos selected in the basket are deemed iconic enough to be representative of prices in a particular precinct that is smaller than a whole central region or outside central region as defined by URA. For areas outside central region we pick condos either right at or nearest MRT stations as these tend to be well sought after by investors. Our basket would allow property investors to see the actual variation in prices over time for a group of fairly well-known and popular condos in Singapore. However our illustration is nothing more than simple averages of all transactions done over 6-month periods (all data from URA) so do take the reading with a pinch of salt. We also highlight the highest rental achieved in the period.
We will look at the average rentals and highest rent achieved for last 6-month period (Oct 2016 to Mar 2017) and contrast that with the previous 6-month period (Apr 2016 to Sep 2016). We will highlight double-digit percentage change (above 10%) for you in blue (increase) and red (decline).
Average rentals are still falling across the board with the exception of One-North Residences which bucked the trend but only slightly. We highlight the 4 condos with the biggest drop of more than 10% in average rents in the most recent 6-month period over the previous 6-month: Orchard Residences (4-bed), Cote D’Azur (4-bed), The Centris (3-bed), Sky Habitat (2-bed).
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Average rentals over the period tells us more than the mode, or the highest rent achieved in the period. If one takes a closer look at the broad-based decline in both absolute and percentage terms, there are some noteworthy observations which might not be all that surprising to most of us:
- Rents in most regions are still dropping but it seems outskirt areas are under more pressure than central region. The supply glut of recent years is in the outskirts or mass market. The problem is accentuated by the fact that in a down market, tenants tend to move back closer to town.
- Rents in CBD seem to be holding up quite well as it registers the lowest absolute fall. This is also supported by the limited supply of new units in CBD.
- Almost across the board, rents for bigger units (3 and 4-bedder) drop more than 1 and 2-bedders. This is the same be it in the luxury segment (Orchard Residences), high-end segment (Sky Habitat), or mass market (The Centris).
The supply overhang situation is unlikely to see significant improvement in the short term and property investors need to take heed and do their homework carefully before rushing out to place cheques at new launches, notwithstanding the pickup in market activities since the start of the year. One must have the “holding power” where we hope in three to five years’ time global economic growth would pick up and Singapore will once again be at the epicenter of the 600m ASEAN market and MNCs would start to invest again in the region.
Property investment is still one of safest asset class provided one does not sell out prematurely due to financial situations. Careful financial planning is required and to this end, it makes perfect sense to have a trusted mortgage consultant partner who can help lower your cost of funding over time, and not just one-off at the point of purchase. Speak to us today.
At MortgageWise, we seek to provide thought leadership in the area of mortgage planning in Singapore, taking deep dive into developments and news on mortgages & helping clients track interest rate movements. We do not just go for one-time business with clients but rather choose to build long trusting relationships by giving truly independent advice to the extent of losing the deal. We strive to become the first-choice mortgage partner for homeowners and the creditable distributor of mortgage products for banks and financial institutions in Singapore.