By David Dickinson
Most of the research on Singapore’s rental market is focused on private housing (e.g. condos and landed houses) because these properties can be purchased for investment and freely rented. However, at the time of writing, an estimated 60,000 HDB flats are being rented out, and they make up about one third of all properties rented in Singapore (excluding subsided rentals by HDB).
In this guide, we deep-dive into the renting trends across HDB townships to glean insights into this important yet relatively under-researched sector.
The Biggest Townships Have Most Rentals
What Is The Rate Of Renting?
Closeness To The City Centre
The Age of the Flat
The Biggest Townships Have Most Rentals
In 2020, there were 38,798 new rentals approved in sold HDB flats in Singapore. Since location is a key consideration in the search for a home, let’s first break down the rentals by township (Figure 1).
Tampines, Jurong West, Bedok and Sengkang had the highest number of HDB rentals, each with over 2,000 commenced last year. At the other end of the spectrum, Bukit Timah had the fewest with only 109, followed by Marine Parade with 413 and the Central area at 549. That means Central Singapore only made up 1.6% of all rental commencements in 2020. While that might seem surprising, the reason is because the number of new rentals is generally very closely correlated to the size of a town.
It could also have something to do with the fact that the Central districts have fewer HDB flats and are mainly dominated by condominiums, which leads us to consider the rate of renting.
What Is The Rate Of Renting?
As mentioned, township size alone does not tell the full story, especially if we want to know where owners are more or less likely to rent out their flat. To do this we need to look at the rates of renting rather than the absolute numbers.
And because the HDB market is heavily regulated with restrictions on renting out flats that are still within their Minimum Occupation Periods (MOP), we must exclude these to get a more accurate picture.
The chart below (Figure 2) shows the number of rentals commenced in each township as a percentage of flats that were eligible to be rented out (based on the above exemption of MOP flats*). For this, we used data for 2019 because it’s likely to have been a more typical year than 2020, which was characterized by the COVID-19 pandemic. On average, about 5.4% of eligible flats were rented out in 2019, but there were big differences between the townships.
Closeness To The City Centre Does Matter To Some Extent
While Central and Marine Parade contribute relatively few flats to the rental market (as in Figure 1), each flat in these townships has a much higher chance or being rented (Figure 2). Central had the highest rate of rental at 8.1% with Marine Parade close behind at 8%. Queenstown and Clementi were also well above the average at 7.3% and 7.2% respectively.
The lowest rate was in Bukit Panjang at 3.9% followed by Choa Chu Kang and Woodlands at about 4.2% each.
Some townships close to the city centre tended to see relatively more renting, and Clementi probably got a boost from some of its estates being close to education campuses. But Kallang/Whampoa and Bukit Merah are also very central so why weren’t they higher?
To Some Extent, The Age of the Flat Also Matters
Could the age of flats in the townships be related to the rate of renting out? There is some evidence of this in Figure 3 that compares the rate of renting to the average age of flats in townships. While Kallang/Whampoa and Bukit Merah are close to the city, the average age of their flats was about 31 or 32 years, much younger than Marine Parade (almost 45 years old) and slightly younger than the Central area (about 35 years old). The lowest rate of renting was in Bukit Panjang, where flats are 22 to 23 years old on average.
Together, closeness to the city centre and the average age of the flats might suggest that renting would be higher in mature HDB estates than in non-mature ones. After all, mature towns are older, and hence, tend to be better developed, often featuring better public transport connectivity and more schools, retail hubs, and other facilities and amenities.
However, the data shows that this hypothesis is not always true. The non-mature towns of Punggol and to a lesser extent Sembawang and Sengkang (shown in orange in Fig 3) had far higher renting rates than might be expected from their age and location alone. For example, following the above logic, Punggol should have the lowest rate of renting (the average age of flats there was about nine years old and it’s a long way from the city), but that is not the case.
More Renting Of 10- To 20-Year-Old Flats
Why do we see these patterns? Figure 4 might provide a clue as it shows the rentals commenced by the age of flats across Singapore. The oldest flats had the highest rate of renting. However, flats aged between 10 and 20 years also had high rates.
Our guess is that this could be due to families holding on to their flats and moving away, perhaps for children’s schooling or work. Whether this pattern has always been there amongst flats 10 to 20 years old, or is something of a more recent trend, it could help explain what is happening in Punggol as it has the largest proportion of flats aged between 10 and 20 years of any township in Singapore. Whatever the reasons, Punggol seems to be a rental hot spot.
In conclusion, the size of a town together with the age and locations of flats broadly influences how much renting occurs. Next time we will dig a little deeper and look at hot spots within some of the towns.
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*Sold flats eligible to be rented was based on total sold flats minus new flats estimated to still be within their initial MOP based on their year of completion. Also, resales of older flats within the previous five years were also subtracted. Stock owned by PR's and ineligible for rental were not removed, though some of these flats will have been excluded if they had been purchased within the previous 5 years. Numbers of sold flats in each township and year of completion was sourced from data.gov.sg.