Rents are being lowered as the rental market is booming and demand has slowed.
Rent prices will likely undergo a correction as a result of the continued downward pressure both on transacted and asked rents.
The rental sector is nearing a pivotal point. The market is uncertain, so it’s difficult to know the extent of the correction.
According to SRX’s and 99.co’s flash estimates, condominium rentals increased by 0.3 percent in March. This follows seven consecutive months where they had declined.
Rents are likely to be on the rise, but the drop may not seem as dramatic. Rents may also correct themselves depending on the attributes of the project and its location.
“Rents could be affected by units that are older or have less desirable characteristics or locations,” she said. Rents tend to remain steady for newer developments or those located in desirable areas, such as the freehold condo Klimt Cairnhill at District 9, which are highly sought-after.
The rents of three-bedders, and other smaller units have been slowing down. This could be a sign of an increased number of inquiries, or that landlords are resisting further rent reductions. Meanwhile, the larger bedroom type is holding on because of limited supplies.
Orchard Road and River Valley are still bucking this trend. The median rent requested by tenants is S$6,000 each month.
PropertyGuru reported that private landlords’ asking rents in Singapore had been declining since the end of 2023.
Rental demand was easing and supply increasing, according to the report.
The study was published by PropertyGuru in late March and showed that the asking rents as shown in the listings of their portal in the third quarter of 2023, declined steadily. The corrections in asking rents from October and November led to the decline of transacted rentals in December.
Both asking and sold prices have seen significant growth over the past two years. According to the Urban Redevelopment Authority’s Rental Index, rents for private non-landed homes increased by 38.8 percent between Q4 of 2021 and Q4 of 2023.
PropertyGuru’s portal increased the median asking rate by 27,3 percent between January 2022 and Dec 2023. The median transacted-rent, however, rose 35.3%.
The decrease in rents coincides with a decline in rental demands and an increase in availability in the past 1 to 2 years.
Lee suggested that landlords, who had expected tenants to be paying higher rents during the second half in 2023, may have faced longer wait times when leasing their properties or they might have done so eventually at lower prices.
In 2023 the gap between asking and transactional rents would begin to shrink
According to him the narrowing gap shows a change on the rental market. Many landlords have stopped increasing their rents. The fact that rental property remained on market for longer periods likely contributed to this trend. Landlords adjusted their expectations accordingly to match market conditions and tenant affordability. Singapore has seen a downward trend, but certain areas have managed to buck the trend.
The rental listings of District 9 (Orchard Valley, River Valley), for instance, maintained the highest rates of visits, had a high level renter interest, and experienced an increase in market friction.
This may indicate that there’s a higher demand for rental property than what is available in the current market (in this area), and a more competitive market among renters.
The median monthly rent in District 9, as requested by potential tenants, was S$6,000 in March this past year. The rent for the 25th and 75th percentiles was S$4,000 while the 75th percentile’s was S$8,800.
99.co revealed that the average rental for a two bedder at The Sail @ Marina Bay, a project very popular in the Core Central Region, was S$6,656 per month in January. It was a rise of 2.4% from January 2023, when the rent was S$6,499.
Stirling Residences (a popular project in Rest of Central Region) was S$4,620 for January 2024. That’s down 7.2% compared to S$4,979 in the previous calendar year. Parc Riviera in Outside Central Region had an average monthly rent per two-bedder of S$3,740 for January 2024. This was down 8.2% compared to January 2023’s S$4,072.
