Local rents for non-landed private homes rose for the 25th consecutive month, climbing 1.4 per cent in January, although the rate of increase slowed and the number of transactions decreased.

Estimates released by property websites 99.co and SRX on Tuesday (February 28) showed that local non-landed private rents rose for the 25th consecutive month in January, but the rate of increase slowed significantly to 1.4 per cent from 3 per cent in December last year.

The increase in non-owner occupied property tax this year was intended to be passed on to tenants by landlords, but the record high rents in December led to a smaller increase in rents in January.

The slowdown was either due to the fact that rents had already risen significantly over the past year, or that January coincided with the Lunar New Year and fewer people were looking at properties, resulting in lower transaction volumes.

The report revealed that the largest rent increases in January were for non-landed high-end private homes in the Central Core Region (CCR) at 1.8 per cent, 1.7 per cent in the Other Central Region (RCR) and the smallest increase of 0.8 per cent in rents for mass market private homes outside the Central Region (OCR).

Overall rents climbed by 33.2 per cent compared to the same period last year, with the most significant increase of 34.1 per cent in the Other Central Region, 33.3 per cent in the Mass Private Sector and 31 per cent in the Central Core.

In terms of rental transactions, the report estimates that a total of 6,285 rental units were sold in January, down from 6,345 in December and 7 per cent below the five-year average. The highest number of transactions took place outside the Central District, at 37.9 per cent, followed by non-landed private homes in other Central Districts, with the lowest number of lease transactions for high-end private homes, at 28.9 per cent of total transactions.

The increase in private residential rents was mainly driven by demand for high-end private residential units, particularly those with a monthly rent of $10,000 or more. Although these high-rent transactions accounted for a small proportion of total transactions, they had an impact on overall rental increases.

Singapore remains attractive to expatriates and high net worth individuals, so this trend is expected to continue in the short term.

Rental growth is expected to remain moderate as more non-landed private homes and HDB flats are completed during the year, current tenants move into their new homes to vacate their units, and new private homeowners rent out their newly completed units, so market supply will increase. The opening of the Chinese border and the return of more expatriates will absorb some of the increased supply, mitigating the sharp fall in rents.

Despite the reopening of the Chinese border, the economic outlook for this year is still full of uncertainty and some owners of older private homes may adopt a defensive strategy to retain their original tenants, which could slow down rent growth to 10-15% this year.

On the other hand, 99.co and SRX also reported that overall HDB rents climbed by 0.6 per cent in January compared to December, with rents in mature and non-mature HDB areas increasing by 1.4 per cent and 0.2 per cent respectively. Executive Condominium (EC) rents increased by 2.9 per cent.

Overall, HDB rents increased by 27.5 per cent over the same period last year, while rental transactions decreased by 16.1 per cent.