HDB subletting rents for 3-room to executive flats have been on a general downtrend since 4Q13. Rents for 3-room, 4-room, 5-room and executive flats have fallen by 4%, 2%, 3% and 4% respectively from 4Q13 to 4Q14. This coincides with the uptrend in rental supply as evidenced by the number of subletting approvals which grew 43% from 7,268 approvals in 4Q13 to 10,365 approvals in 4Q14.

According to the URA, 24,796 private residential units, including ECs, are expected to be completed in 2015 and another 25,717 units are expected to be completed in 2016. We expect this to lead to further growth in HDB rental supply as more upgraders choose to rent out their HDB flats instead of selling in a market with softening prices. Some upgraders may also choose to keep their HDB flats for rental income as they can generally achieve higher rental yields than private residential properties.