Rents up nearly 30% for the year
Jan 28, 2023
By   Internet
  • City News
  • Housing for rent
  • rent analysis
  • rental market
Abstract: Sales of new private homes plummeted by 45% in 2022 due to an uncertain economic outlook and a lack of new project openings, yet rents rose at the highest level in 15 years, reaching 29.7%.

As of the fourth quarter of 2022, there were 16,024 unsold units with approved plans. Including completed but unsold units and units without planning approval, the total unsold stock in the fourth quarter of 2022 was 24,903 units, up about 15.8% from the third quarter.


Based on the estimated number of new private residential sales in 2023 (8,000 to 9,000 units), the unsold stock will be cleared in roughly 2.8 to 3.1 years. The supply and demand situation is now more balanced than the tight supply in early 2022.


Completions increased to 4,245 units in the fourth quarter of 2022, the highest level in six years.


17,427 units (excluding executive condominiums) are expected to come to market in 2023, which will ease the tight supply and tight rental market.


Rental budgets are also likely to be constrained by slowing economic conditions and other cost of living pressures. Rental growth fell from 8.6% in the third quarter of 2022 to 7.4% in the fourth quarter.


According to Y.C. Tai's Director of Industrial Research and Consultancy, Lan Zhenwen, while the vacancy rate dropping to 5.5% in Q4 2022 means the rental market remains tight, overall rental growth will return to a more reasonable level in 2023.


Despite tighter financing conditions, the current healthy labour market is expected to support housing demand.


Developers will pick up the pace in 2023, launching around 10,000 new units.


This is expected to boost sales in the new private residential market to around 8,000 to 9,000 units. As for the private resale market, transactions are expected to slow down to between 10,000 and 12,000 units.


Although developers will be more cautious in setting prices given the affordability of buyers, rising land prices will drive up the reserve price of new launches.


In addition, the large increase in supply in 2023 will limit price increases, with private property prices estimated to rise modestly by 1-3% in 2023.