Private Home Rental Market Could Face Supply Squeeze; Rents Projected to Rise 2% to 4% This Year

Rental growth for non-landed private residential properties in Singapore slowed markedly last year, easing from a 2.5% increase in 2023 to just 0.1%. This was also significantly lower than the 34.2% surge recorded in 2022.

Looking ahead to 2025, as fewer private residential units are slated to obtain their Temporary Occupation Permit (TOP) this year, demand in the private rental market may outstrip supply, potentially driving rents up by 2% to 4%.

Flash estimates for December show that non-landed private residential leasing volume rose 17% month-on-month to 5,862 units. This marked a rebound after four consecutive months of declines.

Full-Year Rental Volume Up 4.5% Last Year

However, compared to the past five years, rental volume in December was 10.3% below the five-year average for the month. For the whole of last year, full-year leasing transactions rose by 4.5%.

Across market segments, leasing activity was most buoyant in the mass-market Outside Central Region (OCR), accounting for 38.2% of total transactions. The mid-tier Rest of Central Region (RCR) made up 32.5%, while the prime Core Central Region (CCR) accounted for 29.2%.

In terms of rents, overall private residential rental prices climbed 0.9% in December. Both the CCR and RCR recorded rent increases of 1.1% each, while the OCR saw a 0.3% uptick.

According to data from the Urban Redevelopment Authority (URA), the number of private residential units obtaining their TOP this year is projected to drop sharply by 40% from 10,561 units in 2024 to 6,316 units in 2025. With fewer units available for rent, the private rental market could see demand exceed supply, putting upward pressure on rental rates.

Private residential rents are projected to climb further by around 3% this year, with leasing volume expanding by 2%.

HDB Rents Rose 3.65% Over the Year, Slower Than Past Two Years

Meanwhile, HDB rents edged up 0.4% month-on-month in December, bringing full-year rental growth to 3.65%, lower than the 10% recorded in 2023.

It is customary for the rental market to see stronger activity towards the year-end, as prospective tenants typically secure accommodation before the new year commences, bolstering leasing demand and supporting rental prices across both private homes and HDB flats.

Private home rents showed signs of recovery in the second half of last year and are expected to sustain this momentum into this year, potentially clocking full-year growth of 2% to 4%. Favourable macroeconomic conditions and steady employment growth will lend support to rents. Additionally, the decline in private residential completions obtaining TOP this year will tighten supply, further driving rents upward.

On the public housing front, an estimated 6,974 HDB flats will reach their five-year Minimum Occupation Period (MOP) this year—the lowest tally in a decade and a sharp contraction from 11,952 units in 2024 and 15,549 units in 2023. The reduced supply of HDB flats available for rent will underpin prices, with HDB rents expected to climb another 2% to 4% this year.