SINGAPORE – Condominium rents marked the fifth consecutive month of decline in December, wiping out the growth seen in the first half of 2023. The Housing Board rental market, however, continued registering growth in rents and leasing volumes.

Condo rental prices declined 0.5 per cent from November 2023, led by rental falls across all the regions, according to flash data from real estate portals Singapore Real Estate Exchange and 99.co released on Jan 18.

But overall condo rents were still 2.6 per cent higher compared with December 2022. Rents in the outside central region (OCR) or suburbs were 4.4 per cent higher, and in the rest of central region (RCR) or city fringes, rents were up 2.6 per cent. Core central region (CCR) or prime area rents were 0.9 per cent higher on the year.

Mr Mark Yip, chief executive of property firm Huttons Asia, noted that the decline in private rents in December was milder than in the previous month, which was likely caused by a slight uptick in demand from new hires starting work in 2024.

Mr Eugene Lim, key executive officer of real estate firm ERA Singapore, noted that landlords will have to bear the brunt of rising annual values and property taxes in 2024, saying: “With interest rates still high currently, more landlords may decide to settle for lower rents, rather than leaving the unit vacant.”

Analysts expect private rents to ease further in 2024.

Mr Nicholas Mak, chief research officer of property portal Mogul.sg, said: “As the supply-and-demand dynamics in the rental housing market continue to normalise in 2024, the rental rates of private residential properties could decrease by 10 to 15 per cent in the coming 12 months, which would bring the rates to the levels seen in 2022.”

Ms Christine Sun, chief researcher and strategist of real estate firm OrangeTee Group, expects the growth of condo rents to continue moderating at 2 per cent to 5 per cent in 2024, slower than the 29.7 per cent in 2022 and 9.9 per cent in 2021.

Condo leasing volumes increased 14 per cent on the month to an estimated 5,644 units in December.

Ms Sun attributed the increase to more landlords being willing to accept lower rents and more lease renewals before the new year – as seen at the end of 2022 and 2021. “Demand will likely be sustained in January 2024 as tenants continue to sign new leases or renew leases at the start of the year,” she noted.

On the year, rental volumes were down 11.6 per cent. They were 12.6 per cent lower than the five-year average volume for the month of December. The OCR accounted for 38.2 per cent of total leasing volumes, while the RCR contributed 33.6 per cent and the CCR formed 28.2 per cent.

Rising rents for all HDB room types

In December, the HDB rental market recorded a 1 per cent increase in overall rents on the month. Rents in mature estates edged up 1.2 per cent, while those in non-mature estates gained 1 per cent.

All room types registered rising rents, with three-room flats gaining 2.1 per cent, followed by five-room units (1 per cent), executive flats (0.9 per cent) and four-room units (0.1 per cent).

Year on year, overall HDB rents rose 10.1 per cent. Rents in mature estates increased 10.4 per cent, while those in non-mature estates climbed 10.3 per cent.

Executive flats recorded the largest rental increase on the year at 14.7 per cent, followed by five-room units (10.7 per cent), three-room flats (10.5 per cent) and four-room units (8.9 per cent).

HDB leasing volumes increased 7.4 per cent to an estimated 2,891 flats in December, from 2,693 units in November.

The figure was 12.8 per cent higher compared with December 2022, but 0.1 per cent lower than the five-year average volume for the month of December.

Four-room flats had the most transactions in December, at 36.2 per cent of total leasing volumes. Three-room units contributed 34.1 per cent, followed by five-room flats (24 per cent) and executive flats (5.7 per cent).

While the HDB rental market is on the rise, analysts have mixed views on its 2024 outlook.

ERA’s Mr Lim expects average HDB rents to grow 8 per cent to 10 per cent in 2024. “ERA expects the number of rental approvals to range between 37,000 and 38,000 in 2023, and stay similar between 36,000 and 38,000 contracts in 2024,” he said.

Ms Sun from OrangeTee Group said that despite a tighter HDB market with a reduced number of flats that will reach their minimum occupation period, she does not expect rental hikes since affordability remains tenants’ key concern. She said: “HDB rental prices are anticipated to stabilise in 2024, with a slight gain of 1 to 3 per cent.”

Mogul.sg’s Mr Mak expects HDB rents to start declining in the first quarter of 2024. He noted: “As the rentals of private residential properties are expected to decline in 2024, the rentals of HDB flats cannot continue to defy gravity.” THE BUSINESS TIMES