If you're looking for a rental property in Singapore, you may have noticed that rents for both HDB (Housing Development Board) and condominiums are on the rise and there are fewer flats to choose from.

According to preliminary data released by property website 99.co and the Singapore Real Estate Exchange (SRX) on Wednesday:

Rents for HDB homes rose for the 37th consecutive month in July, up 2 per cent, compared to a 1.4 per cent increase in June

From July 2022 to July 2023, rents for public housing rose 24.1 per cent overall.

Flat rents were not far behind, rising for the second consecutive month in July, up 1.1 per cent, and in June, up 0.2 per cent. Compared to the same period last year, rents were up 21.6 per cent.

Lettings also increased in July. The number of HDB units rented increased by 11 per cent to 3,320 compared to June. This is the highest HDB rental volume recorded since August 2022. For condominiums, the number of rentals increased by 25.3 per cent to 7,282 units in July compared to June.

So why is Singapore's rental market so hot? What are the factors driving the rise in rents and lettings for HDBs and condominiums? And what will be the future trends?

Due to the impact of the epidemic, many people have opted to extend or re-sign their leases to avoid frequent moves or returns to their home countries. This has led to a decrease in available units and an increase in demand in the market.

Another reason is that due to economic uncertainty and rising unemployment levels, some tenants chose to move from the centre to the suburbs or from private flats to HDB housing in order to save money. This has led to increased demand and higher rents for suburban and HDB housing.

In addition, some buyers who have recently purchased new condominium units have also opted to temporarily rent HDB housing or other condominium units while waiting for delivery. This has also increased the demand for short-term or flexible leases in the market.

As landlords take advantage of the imbalance between supply and demand in the market, they have increased their asking prices.

The average rent per square foot (psf) for HDB Executive HDB flats reached S$3.06 (about R15.5) in July.

This compares to S$2.76 (about R14), S$2.59 (about R13.1) and S$2.51 (about R12.7) for three-room HDB flats, four-room HDB flats and five-room HDB flats respectively.

The average rent per square foot for flats also reached S$4.44 (about R22.5) in July.

This was S$5.66 (about R28.7) for prime locations, S$4.25 (about R21.5) for the city fringe and S$3.58 (about R18.1) for the suburbs.

These figures suggest that the rental gap between HDB and condominiums is narrowing, and that some tenants looking for condominium units may shift to renting executive HDB flats, while some tenants looking for flats in prime locations may shift to renting flats on the city fringe or in the suburbs.

According to a forecast by Mr Nicholas Mak, Chief Research Officer of real estate portal Mogul.sg, the growth in flat rentals may start to slow down in the second half of 2024. This is because about 23,400 private residential units will be completed in the second half of 2023 and 2024. This will increase the number of units available for rent in the market, thereby reducing the bargaining power of landlords.

However, rents for HDB flats are likely to remain stable or increase as HDB flats are in relatively low supply and favoured by many tenants. In addition, with the epidemic under control and borders open, Singapore is likely to welcome more expatriates and international students, which will also drive demand in the rental market. We advise you to carefully compare different areas and types of flats, consider your budget and needs, as well as negotiate reasonable rents and terms with the Housing Association when choosing a rental property.