Private home rents rose 1.2% last year; growth expected to ease further or even decline this year: Analysts

Singapore private home rents fell for the fifth consecutive month, dropping 0.5% month-on-month in December last year, bringing full-year growth to 1.2%—a sharp slowdown from the 31.4% surge recorded in 2022.

As supply and demand dynamics in the residential rental market continue to normalise, analysts expect private property rental growth to moderate further this year, with rents potentially declining by 10% to 15%.

Flash estimates show that private home rents slipped by 0.5% month-on-month in December, easing significantly from the 1.4% drop seen in the preceding month.

Across market segments, mid-tier private homes in the Rest of Central Region (RCR) posted the steepest decline, falling 1% month-on-month. Rents for mass-market private homes in the Outside Central Region (OCR) and luxury private properties in the Core Central Region (CCR) decreased by 0.6% and 0.5% respectively.

In terms of transaction volume, approximately 5,644 private residential units were leased out in December, marking a 14% month-on-month increase. For the full year, the number of rented private residential units fell by 8.08% to 68,743 units.

Some landlords cut rents by 10% to secure tenants

With overall rental rates on a downward trend, more landlords have been willing to accept lower rents. Consequently, more tenants have signed new leases or renewed existing ones, driving up transaction volumes in December. Some landlords have even agreed to slash rents by 10% to attract new tenants.

Singapore private home rents already began declining in the fourth quarter of last year. Over the three-year COVID-19 pandemic period from mid-2020 to mid-2023, private home rents jumped 56% due to an imbalance between supply and demand, leaving ample room for rents to correct this year.

As supply and demand in the residential leasing market continue to normalise, private home rents could soften by 10% to 15% over the next 12 months.

Rental growth for private homes is likely to moderate further this year, with estimates hovering between 2% and 5%.

On the other hand, HDB rents rose by 1% month-on-month in December, ending the year up 9.3%—also well below the 26.8% increase seen in 2022.

With fewer HDB flats reaching their Minimum Occupation Period (MOP), the supply of rentable units is projected to shrink further. This year, the number of HDB flats fulfilling their MOP will drop from 15,748 units last year to 13,093 units. HDB rents are expected to stabilise this year, with growth projected at between 1% and 3%.