These 3 charts show economic gloom is boosting rental demand

Average rents for landed homes reached historical high of $2.81 psf; Imagine how much more for non-landed.

According to Savills Consultancy & Research, leasing volume leapt 11% m-o-m to 4717 leases in July 2012.

The number of leasing transactions rose 11% m-o-m for both non-landed and landed homes, showing that demand was equally strong for both segments, it said.On a y-o-y basis, total leasing volume fell marginally by 0.7%, almost matching the level seen last year.

For the first seven months of this year, the total transaction value reach 27,932 units, 5% higher y-o-y.

Median rents, meanwhile, reached historical highs for both landed ($2.81 psf pm) and non-land homes ($3.60 psf pm).

On a y-o-y basis, median rents for landed homes rose 2% while non-landed homes rose 7%.

The total transaction value (S$24.5 million) has reached a historical high in July. On a y-o-y basis, Savills reckons that July’s transaction value rose 0.5%. For the first seven months of this year, the total transaction value reached $136.98 million, 8% higher than the $126.44 million recorded a year ago.

" Although new incoming expatriates appear to have more constrained rental budgets these days, we would nevertheless expect rents, as measured on the $psf basis to increase as the new incomers lean towards the smaller format homes or landed properties where the absolute quantum paid is lower," said Savills analyst Alan Cheong.

According to Cheong, traditionally, July has been a seasonal peak for the rental market. Moving forward, he expects the number of leasing transactions to drop over July’s numbers, but nonetheless, when measured on a year-to-year basis, would at least hold firm or even sporadically rise for a month or two.

"Increasingly, because of the still dire Euro Zone situation, we would expect the number of new leases to stay high and even exceed 2011’s numbers. However, the rental quantum payable is expected to fall. At the moment, we are not yet witnessing the completion of the bulk of small format homes sold from 2010 onwards, and this has the effect of keeping the rental indices up. However, once more gets completed from 2013 and if the Euro Zone situation does not improve, rents may see an inflexion point," he said.