Statistical data from the Urban Redevelopment Authority (URA) indicates a year-on-year decrease of 9.8% in private residential leasing volume in the third quarter of 2023, with an anticipated decline of around 5% in rental rates for the upcoming year. This trend has multiple contributing factors.

Firstly, the increase in the supply of residential properties is a significant factor leading to the decline in the leasing market. In the third quarter of 2023, the supply of newly built residential properties continued to significantly exceed net demand, resulting in a 2.1% quarter-on-quarter increase in the private residential vacancy rate, reaching 8.4%.

It is expected that next year, supply will continue to outpace demand, with an estimated completion of 9,900 new residential units. This oversupply situation is likely to exert pressure on rental prices, causing them to decrease.

Secondly, the unfavorable global economic conditions also play a role in influencing the private residential leasing market.

As headwinds impact European and Asian economies, many multinational companies are likely to prioritize cost control, potentially leading to a reduction in the number of foreign workers stationed in Singapore. This could affect the residential leasing market, potentially causing a decline in rental prices.

In addition, inflationary pressures have also had an impact on rental prices. High inflation rates may reduce consumers' purchasing power, subsequently affecting their ability to bear rental costs. A sluggish labor market is another contributing factor that may lead to a reduction in leasing demand.

However, it's important to note that these factors do not act in isolation but are the result of mutual influence and interaction. Market conditions may be influenced by various factors, including policy changes and global developments.

Therefore, for individual investors and landlords, closely monitoring market dynamics and making decisions and adjustments based on actual conditions are crucial.

Despite the downward trend in rental prices, it is expected that high-end non-landed residential property rentals will maintain a certain level of stability. In the third quarter of 2023, the average monthly rent for high-end non-landed residential properties was $6.16 per square foot, representing a 0.6% quarter-on-quarter decrease.

While this marks the first decline in rental prices for such properties, they have experienced a cumulative growth of 51.9% over the past 2.5 years. Therefore, rental prices in the high-end market may remain relatively stable.