Rental prices in Singapore have been a topic of conversation for some time now. Anyone who has to rent an apartment or room in Singapore has seen rental prices rise to record highs during the pandemic.
2023 saw a slowdown in the buoyant rental market. Our latest Singapore Property Market Report Q1 2024 shows that asking rents have stabilized and are slowly declining since Q1 2023. So the question is: will rental prices for HDB flats and private properties in Singapore finally come down in 2024? Let’s find out.
High rental prices in 2023: A review
In 2023, actual rental prices rose less rapidly than in 2022. Accordingly, asking prices stabilised and then declined during the same year. The Singapore Property Rental Price Index peaked at 179.20 in the first quarter of 2023 before declining over the following four quarters, reaching 166.42 in the first quarter of 2024.
As more people moved into their homes and more rental properties came onto the market, local demand waned. Landlords who may have initially been hesitant to lower their asking prices had to give in to market pressure and lower their rental prices, even at the risk of leaving their properties vacant.
In 2023, about 19,000 condominiums and 21,400 BTO units were completed. Supply was gradually restored. Accordingly, the Singapore Property Rental Supply Index rose from 64.43 in Q1 2023 to 95.19 in Q4 2023.
The number of enquiries also declined during the same period. The Singapore Property Rental Demand Index fell from 173.89 in Q1 2023 to 125.03 in Q4 2023, confirming that fewer people were looking for rental properties.
Despite the slowing rental market, the reality for many was still high rental prices. In our Singapore Consumer Sentiment Study H1 2024, 85% of renters felt that rental prices were too high. These renters were surveyed from November 9 to December 12, 2023, with 74% of renters surveyed experiencing a huge increase in rental prices when renewing their leases.
Rent prices 2024: What happens now?
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Declining rental demand from local tenants |
From 2023 to 2025, 100,000 homes are expected to be built, more homeowners will move into completed homes |
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Influx of foreign workers can increase demand for rental housing |
However, the number of foreign tenants is not enough to compensate for the declining local demand. |
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Rent prices are expected to remain stable until 2024 |
Prices are unlikely to return to pre-pandemic levels. Rent restraint was first felt in OCR and in neighborhoods where there is an influx of newly completed housing units. |
Here is an overview of what we can expect from the rental market in 2024.
1. Declining rental demand from local tenants
Last year alone, 80% of the projects delayed due to the pandemic were completed. The other affected projects are expected to be completed in early 2025. With a total of 19,600 BTO flats coming to market in three rounds of sales in 2024 and waiting times getting shorter, demand from first-time buyers is also expected to cool further.
A similar development was observed in the private housing market. 2023 saw the highest number of private housing completions (including ECs) since 2016, underlining the significant increase in available housing.
As more families move into their completed homes, local demand has declined significantly: the Singapore Property Rental Demand Index fell by 13.5% in the first quarter of 2024.
2. Likely increase in foreign rental demand
Even if local demand declines, there are likely to be more foreigners looking to rent an apartment in Singapore.
Despite slowing economic growth, Singapore’s economy still grew in Q1 2024 and a gradual recovery is expected. Amid a volatile and uncertain global economic landscape, Singapore continues to be perceived as a “trusted, neutral” hub and seeks to position itself as such. 1,113,000 work permits were issued in 2023, up from 1,033,500 in 2022.
However, this influx of expatriates is not enough to offset the decline in demand from Singaporean tenants.
3. Rent prices are likely to stabilize
With subdued demand, asking prices have also fallen. Singapore’s property rental price index fell from 167.29 in Q4 2023 to 166.42 in Q1 2024. While the upward trend in rental prices did not abate in 2023, actual rental prices fell in Q1 2024 for the first time in three years.
All signs point to rents in Singapore falling, but perhaps not to the extent or as quickly as Singapore renters would like.
As we transition from a landlord-friendly market to a more tenant-friendly one, the impact of rent restraint will likely be felt first in areas further from the city centre and in locations with an influx of newly completed housing. However, it is unlikely that we will see pre-pandemic rental prices any time soon.
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