Residential rents are tumbling as a growing number of home owners balk at falling house prices and choose to lease their flats rather than sell.
In the Lohas Park development in Tseung Kwan O, rents dropped by up to 20 per cent last month, taking rates back to the same level as early last year, according to Alvin Ma, a senior district manager at Midland Realty's branch in Tseung Kwan O.
And in the 19 housing estates in the Tseung Kwan O district, 800 flats were being offered for lease this month, compared to 600 last month, according to Crystal Tam, a sales director at Centaline Property's Tseung Kwan O branch.
La Splendeur, the second-phase development of Lohas Park, is expected to be ready for occupation as early as next month, and the increase in rental flats likely to be released onto the market has prompted many owners in previous phases of the project to cut prices in order to lure tenants, Midland Realty's Ma said.
Last week, a three-bedroom, 903 square foot flat on a lower floor of The Capitol, the phase-one development of Lohas Park, was leased for HK$12,000 a month - HK$13.20 per sq ft of gross floor area or HK$17.60 per sq ft of its 680 sq ft saleable area. The rent was about 20 per cent lower than the average monthly rental of HK$15,000.
"In per square foot terms, rents at Lohas Park have been the lowest among the city's housing estates located along the MTR stations," said Ma, who added that the number of flats for lease at Lohas Park had risen to 350, almost half being offered by owners of flats in La Splendeur.
Centaline Property's Crystal Tam said rents at Tseung Kwan O were under downward pressure because more owners were electing to lease their homes after seeing a slackening of buying interest. The fall in rents had lured more tenants into Tseung Kwan O from Island East, she said, where a three-bedroom flat could cost about HK$20,000.
The head of research at Ricacorp Properties, Patrick Chow, said rents at Festival City in Tai Wai had fallen to between HK$18 and HK$20 per sq ft of gross floor area last month from HK$23 to HK$25 in January.
He attributed the decline to an expected increase in supply once Riverpark, a nearby development, becomes due for occupation from this month.
A senior sales manager at Hong Kong Property's Taikoo Shing branch, Rick Wan, said average rents at Taikoo Shing dropped 8 per cent to HK$34.50 per sq ft of saleable area, from last month's HK$37.50 per sq ft.
But he said it was insignificant in terms of total rent.
"For instance, a unit rented at HK$20,000 monthly a month earlier and now cut to HK$18,000. The difference is only HK$2,000," he said.
The period from April to June was traditionally the low season for the leasing market, he said, and rents would pick up in July as families would start to search for rental homes when the summer holidays begin.