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Singapore rental market analysis (Part 1)

The rental segment is an important part of the property scene. For most people, you would be involved in the rental market at some point of your life. It could be a situation where you are renting out your property for potential tenants or you could be looking out for a good place to rent while you are switching between properties. In this article, I will deep dive into the analysis (comprising trends and comparisons) in the rental market for private properties (condominiums) based on the URA caveats lodged between January and August this year.

A total of ~54,000+ caveats for rental contracts (private condominiums) are lodged with URA from January to August this year. If you break it down into a monthly view, this is what you will see.

On average, you have ~6800 rental contracts lodged on a monthly basis during this period. While there is a dip in the number of rental transactions in May (during the Circuit Breaker period), the number of rental transactions increased after the Circuit Breaker. Rental contracts lodged in the month of July and August are the highest which we have seen in this period. Hence, you could generally infer that the demand for rental of private condominiums is increasing from this overview.

Now, let's take a look at how the rental transactions are divided among the 28 districts.

*No rental transactions for D24*

The three districts with the highest number of rental transactions are District 9 (Orchard, River Valley), District 10 (Bukit Timah, Tanglin, Holland), District 15 (Katong, Marine Parade, Tanjong Rhu) and District 19 (Hougang, Punggol and SengKang). The volume of rental transactions for private condominiums in these 3 districts far surpasses the number in all the other districts and this gives some indication on which are the popular areas in Singapore for people who are looking to rent private condominiums. While the growth of $psf for the individual districts could be affected by the new developments in the vicinity to a large extent, it might not truly reflect the demand of private condominiums in the respective districts. In this case, the volume of rental transactions is a better indicator to reflect the overall housing demand for private condominiums in the various districts.

Below is the table view showing the number of rental transactions for each of these districts.

How does the volume of rental transactions in the respective districts change over the first 8 month of 2020?

Here is a quick overview of the graph.

As expected, you would see District 9, 10, 15 and 19 occupying the upper half of the graph. What's also interesting here is that these few districts see quite a quick and fast rebound from the lows of May as compared to the other districts. You may also notice that District 10 has the rebound of the biggest magnitude among these 4 districts. In fact, it has the highest volume of rental transactions for private condominiums in the month of August.

How would the graphs look like if we were to plot trend lines for each of the districts? Could this give us a better indication of how the rental demand for private condominiums grew over the course of the first 8 months this year? Let's take a look.

Here is how the graph looks like with the trend lines plot for each of the districts.

As it might be unclear to you how the magnitude of the gradients of these trend lines are like just by looking at the graph, I have listed them out in the ranked table below.

While District 9, 10, 15 and 19 might have strong rebounds from the lows of May, they are actually not the top few districts which have the highest growth in terms of volume of rental transactions for private condominiums over the first 8 months of 2020. The top 3 districts with the highest growth are namely District 3 (Tiong Bahru, Alexandra, Queenstown), District 23 (Dairy Farm, Choa Chu Kang, Bukit Panjang) and District 12 (Balestier, Novena, Toa Payoh). District 23 is a pleasant surprise here as most of us might have the perception that Bukit Panjang/Choa Chu Kang area are inconvenient areas and wouldn't be expecting that the rental demand in this area to be so strong.

If you noticed, you could also tell that none of the top 9 districts on this table belongs to any of the CCR districts. This is in stark contrast to the earlier comparison where you have both District 9 and 10 being the top 2 districts with the highest volume of rental transactions for private condominiums. This seems to give a perception that while the CCR districts might enjoy huge volume of rental transactions for private condominiums, the other RCR and OCR districts are also picking up in terms of rental demand for private condominiums. Could this be a direct effect of the work-from-home trend? People might no longer think that they would need to rent housing in the central region of Singapore as they no longer need to commute to the office on the same regular frequency as below. Hence, distance from the offices in downtown is less of a concern and renting in districts beyond the prime area of Singapore might turn out to be an attractive option for many as the rental prices are generally cheaper. This might turns out to be favourable for owners of private condominiums in city fringe or heartland areas looking to rent out their places in the future as the demand for rental in such locations might see a little surge. Definitely something worth investigating here.

Here is the end of Part 1 of this series. In Part 2 of the series, I will be covering more of such analysis (including the rental demand for specific condominiums in the various districts). Stay tuned.

If you are new to the site and interested in properties analysis, you might like to check out the other articles here.

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