In June, apartment rentals in Singapore rose to 6,020 units, up from 5,155 units in May, reflecting a 16.8% increase. This rebound signals a recovery in the apartment market after the weakness in May. Year-on-year, leasing volumes increased by 3.5%, although this figure is still below the average rental volume of 4.2% for June over the past five years.
Despite the overall increase in rental volumes, rental performance varied across regions. Rents in the Core Central Region (CCR) declined by 1.2% month-on-month in June. In contrast, rents in the Rest of Central Region (RCR) also saw a decrease of 0.3%. However, other regions outside the Central Region (OCR) experienced a rising trend, with OCR rents increasing by 0.8% in June.
Year-on-year data further indicates an overall decline in apartment rents by 4.7%. Specifically, rents in CCR, RCR, and OCR fell by 5.7%, 4.6%, and 3.9%, respectively. This disparity may be related to increased market supply and the high-interest-rate environment. Market observers suggest that rents may continue to decline due to ongoing market uncertainties.
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Nicholas Mak, Chief Research Officer at Mogul.sg, points out that the current weakness in the job market could reduce demand for foreign talent, which directly impacts the rental market. Foreign talent is a significant component of the rental market, and reduced demand could negatively affect overall rental demand.
Mak also notes that stringent requirements for employing foreigners might further decrease the demand for foreign labor. He predicts that the SRX and 99.co apartment rental indices could drop by 5% to 9% over the next six months.
In contrast to the apartment rental market, the HDB rental market performed more modestly. In June, HDB rents increased by 0.5% month-on-month and 5.5% year-on-year. Within this segment, rents in mature HDB estates rose by 1.2%, while rents in non-mature estates saw a slight decline of 0.2%.
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Huang Shanting, Research and Market Intelligence Director at ERA Singapore, notes that the number of HDB rentals decreased by 8.5% year-on-year in the first half of 2024. This slowdown is attributed to a decline in both domestic and foreign demand. Many Singaporeans have moved into new homes and no longer require rental housing, while some expatriates have left Singapore due to layoffs or inflationary pressures.
Although HDB rents have increased, market demand remains weak. Sun Ruiwen, Chief Researcher and Strategist at OrangeTee & Tie, believes that despite the rise in rents, overall demand remains below expectations. As rents become more competitive, there may be a return of expatriates to Singapore, potentially having a positive impact on the rental market.
By housing type, four-room apartments had the highest rental volume, accounting for 37.2% of the total. This was followed by three-room apartments (33.9%), five-room apartments (23.5%), and executive apartments (5.5%). This distribution reflects the rental demand for different types of apartments and provides valuable data for market participants.
