Private rents seen sliding by 5% in 2024: analyst

HDB flats, meanwhile, will still see rental growth next year.

Private rents could drop by as much as 5% next year as the housing market is likely to absorb the gush of newly constructed homes this year, according to Huttons Asia.

In a note on Thursday, Lee Sze Teck, senior director for data analytics at Huttons Asia, estimated that the city-state has seen more than 18,000 private residential units built this year, including the 3,167 homes scheduled for completion in the fourth quarter. 

The 2023 tally will be more than double the 9,003 units completed last year, and the largest volume of supply since 2016.

“It may take at least six months in 2024 for the market to digest the large completion of private residential homes in 2023 with downward pressure on rents in 1H 2024… [Before it can] find its footing in 2H 2024,” Lee said. 

He projected private rents to dramatically slow down to a 10% increase this year from last year’s 29.7% surge, before contracting by up to 5% in 2024.

The property consultancy also noted how the economic slowdown, both domestically and globally, has dampened the new demand for private rental housing in Singapore in the second half of this year.

Non-landed rental contracts already so far this year have already dropped by 9.1% year on year while landed rental contracts plunged by 19.1 percent during the same period.

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In the public housing segment, Huttons expects HDB rents to slow down to around 5% to 8% in 2024 from an estimated 12% increase this year, much slower than the 28.5% spike in 2022.

Strong demand particularly from foreign workers continues to support the rental market, although the increasing supply of HDB flats for rent is helping stabilise rents, according to the property consultancy.

“Despite an increase in demand, rents of HDB flats are showing early signs of stabilisation in the last quarter of 2023,” Lee said. “The economic outlook for Singapore in 2024 is rosier than 2023 and there may be more new S Pass holders.”