Upward pressure on Hong Kong home rents has eased as a growing number of flat owners shelve plans to sell and opt to let their apartments instead.
But agents said the decline could be short-lived as underlying demand for rental homes from new entrants to the market would continue to rise given the uncertain outlook for the property sector.
A sharp slowdown in sales following the government's series of measures to cool off the city's fast-rising homes prices has increased the supply of rental accommodation.
Angus Ho, sales manager at Ricacorp Properties' Sha Tin branch, said owners had lowered their asking rents in view of more units shifting from the sales market to the leasing market.
"Some owners have been willing to cut their rents by up to 10 or 15 per cent in order to compete for tenants," he said.
A 452 sq ft unit at Sha Tin Centre was recently leased for HK$12,000 a month, 14 per cent lower than the owner's original asking rent of HK$14,000, he said. The owner had planned to offer the flat for sale at a price of HK$3.9 million but has so far failed to attract buyers.
Similar stories are emerging in other districts.
The owner of flat at Dynasty Heights, in Beacon Hill, Kowloon signed a tenancy agreement for a monthly rent of HK$22,000, which was 18 per cent below his original asking price of HK$27,000.
"More rental flats are being offered on the market," said Benny Ho, assistant district manager of Midland Realty's branch in Tuen Mun, which oversees eight housing estates in the western new town.
"Normally we have 20 to 30 units [among the eight housing estates] on offer for leasing in the market. Now we have up to 40," said Ho.
He said asking rents had dropped to between HK$13 and HK$14 per sq ft from HK$15 prior to the government's latest cooling measures.
He does not expect to see a further rise in the supply of flats for rent, or a further drops in rents. "Forty per cent of flat owners have changed their minds and offered their units for lease, as a result of the tough government measures. However, 60 per cent of potential buyers now opted for renting homes," he said.
Patrick Chow Moon-kit, head of research at property agent Ricacorp Properties, said: " The decline in rents will be short-lived."
Rental transactions in February accounted for 64 per cent of total transactions, up from January's 40 per cent, according to Ricacorp. And in the first 24 days of March, rental transactions accounted for 77 per cent.