Rents drop as rental listings and demand for rentals surge
Orchard, River Valley and other desirable locations continue to defy the trend with rents averaging S$6,000 a month.
A report by PropertyGuru, an online property portal, found that the asking rents for private residential landlords have fallen since the third quarter of 2023 as rental demand has eased while supply has risen.
The study published late in March showed that asking rentals – which are indicated by the rents listed in PropertyGuru listings – steadily decreased in 2023’s last three months. In December, the correction of asking rents in November and October led to a drop in transacted rents.
The price growth is a continuation of two years’ significant increases in both the asking and transaction prices. Rents for non-landed homes have grown by 38.8% between Q4 2020 and Q4 2030, according to the Urban Redevelopment Authority rental index.
The median asking rent for PropertyGuru rose 27.3% between January 2022 to December 2023. The median transacted rental, on the other hand, increased by 35.3%.
Lee said that the decline in rents is due to a decrease in rental demand, and an increase in supply over the last one or two years.
Lee said that landlords expecting tenants to pay more rent in the second half 2023 may have had to wait longer for their property or have leased it at a lower price.
The gap between asking rents and actual rents will begin to narrow in 2023
He said that the narrowing of the gap indicated a shift in rental markets, as more landlords were refraining from increasing their asking rents. The trend is likely due to rental properties staying on the market longer, which has led landlords to adjust expectations in line with market conditions and tenants affordability. Certain areas of Singapore have defied the downward trend.
Rental listings in District 9, for example, (Orchard and River Valley), maintained high visitation rates, with strong renter demand and interest, and increased market friction.
This could indicate a market where landlords are able to charge higher rents because there is a greater demand than what the local market can supply.
In March of this year, the median rent requested by tenants in District 9 in Singapore was S$6,000 per month. The 25th percentile rent was S$4,000 per month, and the 75th centile rent was S$8,800.
Data from 99.co also showed that in January of this year, the average rent for a 2-bedder in The Sail @ Marina Bay was S$6,656. This project is popular among tenants in Core Central Region. The average monthly rent for a two-bedder at The Sail @ Marina Bay, a popular project among tenants in the Core Central Region, was S$6,656 in January this year.
Stirling Residences, a popular project located in the Rest of Central Region, had a rent of S$4,620, down 7.2% from S$4,979 the year before. In the Outside Central Region at Parc Riviera, the average rent for a 2-bedder in January 2024 was S$3,740, a drop of 8.2 percent from the S$4,072 in January 2023.
Rents are likely to be experiencing a price adjustment due to the downward pressure that continues on both transacted and asking rents.
The rental market is at a turning point. It is difficult to predict the exact extent of the correction given the uncertainty in the market.
According to the flash estimates released on Thursday by SRX & 99.co, condo rents increased by 0.3 percent in March after seven consecutive months of decline.
Rents have risen significantly in the last two years, so a drop in rents may not be as significant. Rents can also be corrected based on a project’s location and attributes.
She said that older units, or those in less desirable locations or with less desirable traits may be able to pull down rents. Rents remain stable for some projects, especially those that are in high demand, like the freehold condominium Klimt Cairnhill, located in District 9.
Rents for smaller and three-bedders have slowed down. It could be due to an increase in inquiries or a resistance by landlords to further lower rents. The demand for larger bedrooms is still high due to limited supply.
