Private Rents Down 08 3Q2024 Led Double Digit Vacancy Ccr

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Rent prices of private homes in Singapore have experienced a bounce back in the third quarter of 2024, with a 0.8% quarter-on-quarter increase, as reported by URA on Oct 25. This marks a reversal from the previous two consecutive quarters of declines, which saw a 1.9% drop in the first quarter and a 0.8% decrease in the second quarter. The last time rents saw an increase was in the third quarter of 2023, with a 0.8% rise.For the first nine months of 2024, overall rents have decreased by 1.9%, which is a significant difference compared to the 11.1% increase seen during the same period in 2023. This decline can be attributed to the surplus supply of newly completed private homes in 2022 and 2023, according to Christine Sun, chief researcher and strategist at OrangeTee Group.Notably, rents have shown a consistent increase across all types of properties, with landed homes leading the way with a 3.2% quarter-on-quarter growth, compared to a 0.9% drop in the second quarter, according to CBRE. Meanwhile, non-landed properties have seen a smaller decline of 0.5% quarter-on-quarter, a slight improvement from the 0.8% decrease in the previous quarter.Read also: Private home prices down 0.7% q-o-q in 3Q2024 after four quarters of growthAdvertisementAdvertisementAmong non-landed properties, the Outside Central Region (OCR) and Rest of Central Region (RCR) have seen the most growth in the third quarter of 2024, with a 2.2% and 1.7% quarter-on-quarter increase, respectively. In contrast, the Core Central Region (CCR) has seen a decline of 1.6% quarter-on-quarter. The year-to-date rental growth in 2024 for CCR, RCR, and OCR stands at -3.3%, -1.6%, and -0.5%, respectively.According to Tricia Song, CBRE’s head of research for Southeast Asia, there were 19,968 newly completed private homes (excluding executive condos or ECs) in 2023. This is the highest number of completions since 20,803 units were completed in 2016. The majority of these completions (8,517 units) were in the third quarter of 2023. As a result, vacancy rates have increased, leading to a decline in rents since the fourth quarter of 2023, notes Song.In the third quarter of 2024, 3,253 private residential units were completed, including One Pearl Bank (774 units), Forett At Bukit Timah (633 units), One Holland Village Residences/Quincy House Singapore (551 units), and The Reef At King’s Dock (429 units). This is a 72.8% increase compared to the 1,882 units completed in the second quarter of 2024, points out Song. The total number of completions for the first nine months of 2024 stands at 5,376 units. Another 3,727 units are expected to be completed in the fourth quarter of 2024, bringing the total for 2024 to 9,803 units.”Despite the significant number of new completions in the third quarter of 2024, the number of occupied private residential units (excluding ECs) decreased by 2,051 units, compared to an increase of 4,162 units in the previous quarter,” says Song.As a result, the vacancy rate for completed private residential units (excluding ECs) has increased to 7.2% as of the end of the third quarter of 2024, up from 6.1% in the previous quarter. “This could be indicative of the challenging rental market conditions,” she cautions.The vacancy rates for completed private residential properties in the third quarter of 2024 were 11.2% in the CCR, 8.1% in the RCR, and 4.9% in the OCR, compared to 9.3%, 5.8%, and 4.9%, respectively, in the previous quarter.Read also: Developer sales rebounds in September, rising 90.1% m-o-mAdvertisementAdvertisementWith this in mind, it is expected that rents will continue to decline in the fourth quarter of 2024. However, they are unlikely to return to the levels seen before 2022, according to Song. This is due to higher holding costs, such as increased property taxes, higher purchase prices (requiring higher returns), higher mortgage payments due to higher interest rates, and higher rental demand from the 15-month wait-out period for downgraders (those switching from private to resale HDB) under the September 2022 cooling measures.Song predicts a 3% decline in rents for 2024, led by the CCR segment, which is weighed down by a double-digit vacancy rate.