SINGAPORE -

In a surprising turn of events for the property market, rental prices for Housing Development Board (HDB) flats and condominiums in Singapore witnessed an uptick in November despite the expected seasonal drop in leasing volumes typically observed during the year-end festive season.

Recent flash data released by property portals SRX and 99.co on December 19 indicates that condominium rents increased by 0.2% compared to October. This rise was primarily fueled by a notable 0.8% growth in the Outside Central Region (OCR), which effectively counterbalanced a 0.6% decline in the Core Central Region (CCR) and a slight 0.1% dip in the Rest of Central Region (RCR).

Christine Sun, Chief Researcher and Strategist at OrangeTee Group, pointed out that this marks the second consecutive month of price escalation in the private rental sector. She expresses optimism about the private rental market’s trajectory, predicting it could continue its recovery through 2025, with growth rates anticipated to range between 2% to 4%. This expected recovery is attributed to positive macroeconomic trends, increased employment opportunities, and a tight rental inventory.

Luqman Hakim, Chief Data and Analytics Officer at 99.co, reinforced this view, noting the month-on-month rent increase underscores a sustained recovery following a downward trend earlier in 2024. He suggests that an upward trend in condominium rentals could potentially emerge in 2025, fueled by an enhanced economic outlook.

Mark Yip, Chief Executive of Huttons Asia, characterized the price growth as “stable,” attributing it to reduced pressure on landlords to lower rents. He forecasted that private housing rents in 2024 might maintain levels akin to the previous year, bolstered by firmer demand driven by an improving job market.

In November alone, approximately 5,010 rental units changed hands, reflecting a significant 12.3% decline from 5,712 units rented in October. The OCR accounted for 36.3% of total rental transactions, with the RCR contributing 33.6% and the CCR 30.2%.

Sun noted that the seasonal dip in leasing volume was anticipated, as many expatriates tend to vacation during the holiday season. However, she highlighted a trend where expatriates often renew leases or enter new agreements in December to secure housing before the new year commences. Historical data suggests that rental volumes in December frequently surpass those of November, as observed in both 2022 and 2023.

Year-on-year, condominium rental prices experienced a decrease of 1.3%, attributed to price reductions across all regions—the CCR decreased by 2.4%, the RCR by 1.4%, and the OCR by 1.5%. Despite this, the overall rental volume increased by 0.8%.

The HDB rental market also saw a monthly rise, with prices increasing by 0.4% in November. Mature estates reported a 0.2% price rise, while non-mature estates saw slightly higher surges at 0.5%. Among HDB flats, four-room rentals were the primary contributors to this increase, showcasing a 1.3% rise despite declines in five-room and executive flats.

Yip noted that the year-to-date increase in HDB rental prices now stands at 4%, although this is considerably lower than the substantial 10.1% hike recorded in 2023.

Despite the ongoing affordability of HDB rentals compared to condominiums, the significant price disparities continue to drive demand for HDB flats, which remain a popular choice among renters seeking cost-effective options.

Leasing volumes for HDB flats declined by 13.8% to an estimated 2,155 units in November, down from 2,499 in October, and were also 18.3% lower than the five-year average for the month. Three-room flats accounted for 32.7% of total rental volumes, closely followed by four-room units at 38.1%, and five-roomers at 24.1%, with executive flats making up another 5.1%.

On a year-on-year basis, HDB rents have risen by 4.2%, although overall leasing volumes have dipped by 20%. All types of HDB units reported year-on-year price growth, particularly three-roomers, which experienced a 5.1% increase, while four-room units rose by 4.1%.

Nicholas Mak, Chief Research Officer at Mogul.sg, suggests a significant market shift may be underway, moving from a tenant's market to a landlord's market. He commented on stabilizing condominium rental rates and a gradual uptick in the HDB rental index, forecasting fewer HDB flats will become available for rent in 2025 compared to 2024 due to the expiration of minimum occupancy periods, potentially driving rental growth.

As Singapore's rental landscape continues to evolve, stakeholders in the market will be closely monitoring these trends, making it clear that the dynamics of supply and demand will play a critical role in shaping the future of housing rentals in the city-state.