From February through August 2023, median rents of luxury condominiums were down 2.9 percent, to $5.71 per square foot for a month. In addition, the median rents of city-fringe condominiums in RCR fell 1.3 percent to $5.36 per square foot per month. Conversely the median rents for suburban condos in OCR accelerated by 2.3 percent to $4.54 per month.

The rental market is showing some first signs of a correction in certain sub-markets.

As more local families let their rental properties go, the vacancy rate for completed residential properties in private homes climbed upwards from 6 percent during the first quarter of 2023 to 6.3 percent in the second quarter of 2023.

Tenant competition for housing units began to ease with more condominium completions in the second half of 2023. Tensions have since eased as there is a decline in inquiries and viewings of houses from prospective tenants.

The market for rental is facing some difficulties due to a mix of factors, such as less demand from the domestic market and an increase in demand for housing. The rental market is facing some headwinds as a result of factors like a weaker domestic demand and increased supply of housing.

Are rent prices slowing after a string of quarterly increases?

Read more about: Blossoms One-North

In the beginning of 2023, a lot of tenants were tense from the soaring rents while landlords shifted the extra costs from pricier mortgages and higher living expenses. After witnessing the massive rise in rental costs, renters are at breaking point.

The rent-price disparity between tenants and landlords continues to be large, resulting in fewer deals. Rent prices broke records and reached new highs during the second quarter of 2023. The higher rents were due to a limited rental housing stock, since landlords didn’t have to worry about losing their tenants.

A sudden change in the leasing market as the increasing inventory, a slowing economy, and price resistance caused a drop in the demand. Based on data from the Urban Redevelopment Authority (URA), 56,098 rental contracts (for all residential properties, not including executive condos, also known as ECs) were signed in the first 8 months of 2023, significantly lower than the contracts signed during the same periods in 2022 with 61,801 and in 2021, 66,603.

Prime segment or core central region (CCR) was the hardest affected. Demand dropped by 11.5% year-on-year in the first eight months of 2023. Then came the suburbs, or outside of the central region which saw a depreciation of 10.5%, and the city edges, or the rest of central regions, in which it fell by 5.8%.

In the Covid-19 outbreak that was in the news, there was a large amount of residents renting apartments owing to construction delays for new housing units as well as work-from-home demands. Tenants who were waiting for the finalization of their new HDB or private housing units are moving into new homes.

In the end, some tenants opted for less expensive housing on the market for public housing and others opted to move away from Singapore completely.

Overall median rents for condominiums, which excludes ECs and ECs, remained steady at $5.16 per square foot (psf) each month during August 2023 compared to six months prior, according to URA rental data. Median rents for comparable units were up 14.2 percent in the same time period in the previous year.

The private rental market is finally seeing some moderation. Rent prices have stabilized following two years of steady increases. Growth rates have stagnated for more than six months.

In the first half of 2018, more than 8,000 housing units, including ECs were completed. The total number of units built had more than doubled to the comparable periods in 2022 (3.501 units) or 2021 (3.550 units).

Renters may finally get some relief as rental prices have come under pressure from the ramp-up in demand. With the constant flow of new homes entering the market, there are more options for home owners.

The median rental for luxury condos is expected to hit its highest in April 2023, at $6.11 per square foot (psf) per month. This is due to the fact that median rents dropped over the next four months. Rents for RCR and OCR might not have reached their peak. Prices for rent may continue to rise because condominiums are being built and owners are able to demand higher rents.

Rental volume could decrease further because of the mismatch in expectations between landlords and tenants and the fact that the market is going through an adjustment phase. The slowdown that occurs during the seasonal period at closing of the year might be one reason.

The news of a shrinking pool tenants and a growing competition hasn’t impacted the local market. Many landlords have held onto their hefty asking prices despite a declining market and an upcoming supply of housing. Many landlords are reluctant to cut their asking price due to rising expenses and mortgages.

The stock of public housing has also grown, as a growing number have reached their minimum occupancy limit. Existing stock will continue to build up as renters in the local area slowly leave the market. A greater supply of homes will ease the renters’ competition to secure homes.

Some firms are less sanguine about their hiring expectations for 2024. A slower economy and a weaker global outlook may cause a downward pressure on rental prices.

Trends in rent prices in the middleand long term will be largely determined by the general performance of the economy. Business confidence has already suffered from negative news surrounding the Chinese economy, as well as the more aggressive US Federal Reserve stance, that signaled a rate hike and tighter the monetary policy.

There are silver linings for landlords. Cooling measures have raised the cost of having multiple properties and prompted more HDB upgraders to rent properties before purchasing a brand new home for themselves.

Market activity could increase in the coming year, if tenants sign or renew leases that have lower rents. Tenants may opt for leases that are shorter as they anticipate further rent price reductions, which could lead to more transactions.

Rents may be reduced by more landlords selling their properties at a higher price. If the global economy does better than anticipated it is possible to have expatriates returning to Singapore and boost the market for rental.