Data released by the Housing and Development Board (HDB) and the Singapore Real Estate Exchange (SRX) on January 18th indicates that condo rentals in Singapore have been decreasing for five consecutive months, with a 0.5% month-on-month decline in December. Compared to the 1.4% drop from the previous month, the rate of decrease has notably slowed.
It is noteworthy that Singapore's rental market has been on an upward trend for the past few years, making this decline in rental rates a long-awaited positive development.
Among different regions, the rentals for mid-range condos in the Rest of Central Region (RCR) saw the most significant decline, dropping by 1% month-on-month. Rentals for mass-market condos in the Outside Central Region (OCR) and high-end condos in the Core Central Region (CCR) decreased by 0.6% and 0.5%, respectively.
A search on the Mogul rental app revealed that the prices for shared apartments are approximately around SGD 1,300 per month.
Due to the overall decline in rental rates, more landlords are willing to lower rents to attract more tenants to sign or renew leases. Some landlords even agree to reduce rents by 10% to attract tenants.
According to data from December, rental rates decreased by 0.5% compared to the previous month, but the number of units rented increased by 14%, reaching 5,644 units. Overall, the total number of condo units rented for the year decreased by 8.08% to 68,743.
In the past three years, due to an imbalance in market supply and demand, condo rentals increased by 56%. Therefore, there is sufficient room for a correction in condo rental rates this year.
Predictions suggest that condo rentals may decrease by 10% to 15% in the next 12 months. The growth in condo rentals is expected to continue to slow this year, with an estimated range of 2% to 5%.
In contrast to the decline in condo rentals, HDB rentals have increased.
HDB rentals saw a slight increase of 1% month-on-month in December. Looking at the entire year, HDB rentals increased by 9.3% overall, but the growth rate significantly slowed compared to the 26.8% of the previous year.
One of the main reasons for this change is the decrease in the number of HDB units that meet the Minimum Occupation Period (MOP) requirement, resulting in a corresponding decrease in units available for rent.
According to the latest data, the number of HDB units meeting the MOP requirement will decrease to 13,093 units this year. Due to this limitation, it is expected that rental rates will stabilize this year, with an anticipated increase ranging from 1% to 3%.
In recent years, Singapore's rental prices have consistently ranked among the highest in Asia, even surpassing those in Hong Kong, which has been a subject of criticism.
Strong rental demand and insufficient supply have led to a steady increase in rental prices in Singapore in recent years. To address the issue of supply and demand imbalance, the Singapore government has increased the supply of both HDB and private homes, working closely with the construction industry.
The government has also taken measures to increase the maximum number of tenants allowed in a rented dwelling. From January 22, 2024, to December 31, 2026, the maximum number of tenants allowed in a unit will be increased from the original 6 to 8.
For government HDB flats, the new measure only applies to 4-room flats and above, while the number of tenants for 1, 2, and 3-room flats remains unchanged. The government will assess whether to extend this measure by the end of 2026 based on market performance.
It is anticipated that within the three years from 2023 to 2025, nearly 100,000 residential units will be completed, effectively alleviating the tight housing supply situation.
