: URA Private housing rents to increase 10% in 2023, contract 5% in 2024: Huttons Lower foreigner buying demand, smaller supply of private homes lend support to prices
Although there was a slight rebound in private housing rents in the fourth quarter of 2024, increasing by 0.2% from the previous three months, landlords should be prepared for flat rental growth this year, according to a report by Savills Singapore.
The non-landed private residential market had a relatively poor performance in the first three quarters of 2024, leading to a decline of 1.7% for the whole year. This is the first time that such a decline has been recorded since 2020, when the leasing market saw a drop of 0.5% year-on-year.
In the fourth quarter of 2024, there were 19,733 leasing transactions, marking a decrease of 24.2% from the previous quarter. Savills attributes this decline to a decrease in new rental demand, as well as a seasonal lull in activity at the end of the year.
According to Savills, the majority of the drop in leasing activity in the fourth quarter can be attributed to a 30.8% decrease in rental contracts for landed homes across the island. The number of transactions for apartments and condos also saw a decline of 23.7% over the same period.
Despite the drop in leasing activity, there is still some growth in rental demand in the private residential market, according to George Tan, managing director of Livethere Residential at Savills Singapore. He adds that more affordable rents can be found in suburban areas, allowing tenants to prioritize factors such as larger units, close proximity to MRT stations, malls, and leisure activities.
In terms of rental price growth, only the Outside Central Region (OCR) saw a decline of 0.8% quarter-on-quarter in the fourth quarter. In contrast, rents in the Core Central Region (CCR) and Rest of Central Region (RCR) saw an increase of 0.9% and 0.3% respectively.
Based on a selection of luxury properties tracked by Savills, the average monthly rent for high-end condos increased by 1.7% quarter-on-quarter in the fourth quarter, to $5.85 per square foot per month. This suggests that the luxury rental market could see a slight rebound after five consecutive quarters of decline.
Looking ahead, landlords may face challenges in the rental market as companies continue to reduce their workforce and hire fewer expatriates, says Alan Cheong, executive director of research and consultancy at Savills Singapore. He also notes that property taxes for non-owner-occupied residential properties are set to increase, as well as upward pressure on conservancy charges due to inflation.
However, the relatively low supply of large luxury properties on the rental market may help to resist offers of “underpriced” rentals, says Cheong, adding: “Although rents for non-landed private residential properties have turned the corner in the third quarter of 2024 and continued to rise in the fourth quarter, we anticipate challenges in the rental market in 2025.”
According to Cheong, the adoption of AI technology could reduce manpower requirements for certain high-tech companies, leading to fewer white-collar professionals being hired. This could reduce the pool of expat tenants in Singapore, he says.
“The saving grace for the rental market is that there are fewer new completions of private homes expected in 2025,” he adds. “Higher property taxes for investment properties will also discourage landlords from accepting ‘low ball’ rental rates. Interest rates are also expected to take longer to fall, resulting in mortgage payments remaining at current levels for longer.”
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