Private home and HDB rents climb following the end of June school holidays

Singapore non-landed private residential rents rose by 0.9% month-on-month (m-o-m) in July, while leasing volume surged by 35.1% m-o-m to an estimated 8,133 units rented out.

Flash estimates show that private home rents in the Core Central Region (CCR), representing prime luxury residences, rebounded by 0.1% m-o-m in July following a decline in June.

Similarly, rents in the Rest of Central Region (RCR), representing city-fringe mid-tier homes, turned around to post a 1.4% m-o-m gain after dipping in June. Meanwhile, rents in the Outside Central Region (OCR), representing mass-market suburban homes, climbed further as growth expanded from 0.7% in June to 1.1% in July.

Private rental volume surges 11.4% year-on-year

Compared to July last year, overall private home rents fell by 5%, while rental volume climbed 11.4%, standing 3.8% above the five-year average rental volume for July.

Private rental rates may have bottomed out over the past three months, accompanied by a notable uptick in leasing volume in July. Overall, tenants returning from the June school holidays may have found private residential rents more palatable. Private landlords may also have reached the minimum rental threshold they can accept while servicing their mortgage repayments.

Underpinned by the increase in both volume and rents, the private rental market may be nearing a trough. The arrival of foreign students enrolling in international schools also bolstered private rental demand in July.

Tenant demand shifts from HDB to private homes

In July, tenant demand shifted from the HDB flat market to the private residential sector. The narrowing rental gap between HDB and private properties prompted some HDB tenants to move back to private condos.

HDB rents rose 1.4% m-o-m in July; compared to July last year, HDB rents have grown by 4.7%. HDB leasing volume rose 13.8% m-o-m with an estimated 2,993 units rented out, though it registered an 11.6% drop year-on-year.

Nonetheless, demand in the HDB rental market remained steady, largely spurred by the launch of new private residential projects such as Kassia and Sora in July. Some HDB upgraders transitioned into tenants to avoid paying Additional Buyer's Stamp Duty (ABSD) when purchasing a private property.

It is still too early to declare that the private rental market has hit bottom and rents have rebounded. Amid geopolitical and economic uncertainties and elevated business costs, many companies have frozen hiring and adopted a cautious stance. For now, it remains a tenant-led market, with many remaining budget-conscious.

Signs of market softness persist, and the private residential leasing market may fluctuate between expansion and contraction over the coming months, while the HDB rental market continues to provide the most affordable option for tenants.