Slowing Rental Trends Impact Singapore Homes

by | Mar 29, 2023

Are you considering renting a home in Singapore? If so, then you’ll be pleased to know that rental prices for both condos and HDB flats have increased again. However, the rise has been at a slower pace than before. In this blog post, we’ll discuss the reasons behind this trend and what it means for potential renters.

Overview of Rental Price Trends in Singapore

Rental prices in Singapore have seen a significant increase in recent years, with the Urban Redevelopment Authority (URA) Rental Index of Private Residential Properties jumping by 9.9 percent in 2021 and a 15 percent year-on-year increase in April 2022. The biggest increase in rents before 2022 was in 2007 when rents skyrocketed 41.2 percent. In January 2022, condo rents climbed 1.4 percent and HDB rents rose again at a slower pace. Rents for HDB flats have been on an upward trend as rental demand outstrips supply while asking prices for HDB resale markets remain high but are showing signs of slowing down. Despite the continued rise in rental prices, experts predict that there may be a slight easing of rentals in 2023 due to the government’s cooling measures on properties.

Condo Rents Climb in January

In January, rents for condominiums continued to rise, albeit at a slower pace. According to the data, condo rents climbed by 1.4 percent in January compared to the previous month. This follows an overall trend of rental prices increasing for both HDB and private residential properties due to factors such as the return of foreign workers and Covid-19 trailing off. This trend is expected to continue in the near future, with a slight easing of rents possible in 2023 due to property cooling measures.

HDB Rents Rise Again in January

In January, HDB rents climbed again, though at a slower pace than the previous month. This follows the trend in the overall rental market in Singapore, which has seen an increase of 33.2 percent since January 2022. The slight rise in HDB rents is due to higher rents in mature estates (2.6 percent) and an increase in demand for private residential units. This has been supported by strong fundamentals and cooling measures enacted by the government to prevent runaway prices from impacting affordability. Consequently, HDB resale prices rose at a slower pace of 2.4 percent in Q1 of 2023.

Housing Board Condo and Apartment Rents

In January, Housing Board (HDB) condo and apartment rents continued to rise, but at a slower pace. The number of deals closed during the Chinese New Year period was lower than usual, with rents increasing by 1.9% for HDB flats and 2.3% for condos. This follows year-on-year increases in HDB resale prices in the third quarter of 2022, as well as a hike in condo and HDB flat rentals in December. Property cooling measures have had an impact on the rental market, with experts predicting a slight easing of rental prices in 2023 as supply increases.

Significant Increase in HDB and Private Residential Rents

Rental prices for both private apartments and HDB flats have seen a significant increase in the past two years. According to EdgeProp, rental prices for private apartments rose by 15% year-on-year in April 2022, while HDB flats saw a 20% year-on-year increase over the first three quarters of 2022. This trend of rising rental prices reflects the continued demand for housing in Singapore, despite the cooling measures implemented by the government. PropertyGuru also reported a 0.27% quarter-on-quarter increase in Singapore’s residential rent prices, indicating that rental prices are still on the rise. Although rental prices have increased in recent months, experts predict that this trend may ease in 2023 as more new condos and Build-to-Order HDB flats become available.

Condo, HDB Rents Climb Again in December

In December of 2022, rents for both condominiums and Housing Board flats continued to rise, albeit at a slightly slower pace than in the previous month. Condo rents climbed by 1.4% and HDB rents rose by 3.5%, 4.3%, and 1.5% for three-room, four-room, and five-room flats respectively. This continued the trend of increasing rental prices that have been seen throughout the year, with significant upticks in both HDB and private residential rent prices since July 2020. Despite this steady increase in rental prices, there may be some slight easing of rentals in 2023 due to the cooling measures implemented by the government.

Slight Easing of Rentals Possible in 2023

Rentals for condominiums and HDB flats in Singapore have been on the rise since December 2020, with increasing volumes of renewals from ex-pats and tenants expecting higher rents in 2022. However, the pace of rental growth slowed during the last quarter of 2022 – the slowest quarterly growth since Q2 2020. This could be a hint of a slight easing in rental prices in 2023, particularly since fewer private homes are expected to be completed this year and there will be a significant drop in the number of new HDB home supplies. However, despite the possibility of a slight easing of rentals, demand and prices for mass-market condos are still supported by firm fundamentals.

Property Cooling Measures Impact on Rentals

Since the introduction of a package of property cooling measures in December 2021, the Singaporean government has been intervening again in September 2021 to tackle rising property prices. These measures have been calibrated to tamp down demand for HDB resale flats and curb the strong price growth in the public housing market. Despite this, National Development Minister Desmond Lee noted that the 15-month wait-out period imposed on private property owners has not had an impact on condo and HDB flat rentals, which have continued to rise over the last two years at a slower pace than before. Analysts expect fewer million-dollar HDB resale flats, but rents for four-room units may go up. Overall, these property cooling measures appear to have had some success in tempering rental prices.

Year-on-Year HDB Resale Prices Increase

Year-on-Year HDB resale prices continued to climb in Singapore in the fourth quarter of 2022, albeit at a slower rate than the previous year. According to OrangeTee & Tie, the rise was 2.3 percent and was the slowest increase seen in the past year. This follows other reports that suggest that HDB resale prices may only increase by 5-10 percent this year as construction costs and delays for new flats continue to impact the market. Despite this slower rise, HDB rental prices still increased by 2.4 percent from the previous month, led by higher rents in mature estates.