Private home rents dip slightly in January as rental volume rises 7.6%

In January, rents for non-landed private residential properties in Singapore slipped by 0.3% month-on-month, reversing the 0.9% gain recorded in December last year. Despite the modest decline in rents, rental transaction volume grew by 7.6% month-on-month, reflecting continued market resilience.

Rental Trends for Private Homes

According to released flash estimates, the month-on-month dip in January rents was largely driven by declines in the Core Central Region (CCR) and the Rest of Central Region (RCR), which fell by 0.6% and 0.4% respectively. Meanwhile, rents in the Outside Central Region (OCR) held steady.

Year-on-year, non-landed private residential rents were still up by 0.5%. Rental rates in the RCR and OCR rose by 1.9% and 0.4% year-on-year respectively, whereas rents in the CCR contracted by 1.8% year-on-year.

Growth in Rental Transaction Volume

Despite softening rents, leasing volume continued to climb in January, up 7.6% month-on-month, though this pace was lower than December’s 17% surge. Total transaction volume rose from 5,862 units in December to 6,306 units, but remained 5.6% below the five-year average for the month of January.

Across the market segments, the OCR accounted for 36.6% of January's non-landed private rental transactions, followed by the RCR at 32.8% and the CCR at 30.6%.

Market Analysis and Future Outlook

The increase in leasing volume in January may be attributed to expatriates securing tenancies ahead of the New Year, alongside prospective tenants taking advantage of softening rents to lock in attractive rates. In addition, some landlords were more receptive to negotiating lower rentals to avoid prolonged vacancy periods.

Given that underlying demand remains robust, the recent decline in private home rents may prove to be transitory.

HDB Rents Also Soften

HDB rental rates similarly softened in January, slipping 0.6% month-on-month. The private property and HDB rental markets are closely intertwined. When private home rents are elevated, the HDB rental market attracts more tenants seeking affordable options. However, should private residential rents soften further, some tenants may be enticed back to condominiums, potentially exerting additional downward pressure on HDB rents in the coming months.

Overall, while private home rents softened in January, market demand remains sound. The future trajectory of rental prices will continue to depend on shifts in supply and demand, as well as broader macroeconomic conditions.