Private Residential Rental Market
Rental Index
The private residential properties rental index decreased by 0.8% quarter-on-quarter (q-o-q), reflecting a slower pace of growth compared to the 1.9% seen in the previous quarter. This marked the third consecutive quarter of decline.
The Landed property rental index decreased 0.9% q-o-q while the Non-Landed property rental index decreased by 0.8% q-o-q.
The Non-Landed property rental indexes across all regions saw declines in 2Q 2024. Rents for the Rest of Central Region (RCR) and Outside Central Region (OCR) dipped by 1.4% and 1.3% q-o-q respectively, while the Core Central Region (CCR) saw a less significant contraction of 0.1% q-o-q.
Rentals in the CCR seem to have bottomed out as CCR rents have fallen 4.8% y-o-y while demand remains steady. This has prompted renters who had previously moved outwards to return. Moreover, new expats with high incomes and larger rental budgets are more likely to pay extra to live closer to their workplaces or the city centre.
Also, with lower private property rents, some HDB tenants may find better value in renting a private property unit with on-site facilities and better security. Some HDB renters may capitalise on lower private property rents when their tenancy expires as the rental gap between HDBs and condominiums continues to narrow.
Chart 1 Private Residential Rental Indexes
Rental Contracts
The total number of private non-landed rental contracts rose 1.9% q-o-q in 2Q 2024 to 19,744 transactions. However, this figure is still 9.9% lower than the 5-year average.
Chart 2: Private Residential Rental Contracts
Source: URA, ERA Research and Market Intelligence
With another 11,300 private non-landed units expected to be completed in the 2H 2024, this could potentially lead to more properties being put up for rent , thus further saturating the rental market.
Furthermore, in a high interest rate environment, some landlords may adopt a more practical strategy of securing tenants even at lower rents to ensure that they can cover their mortgages.
HDB Rental Market
Higher HDB median rents across all towns for 3, 4 and 5-room flats
HDB rents are exhibiting an upwards trend, with median rents across all flat types and towns rising by an average of 1.9% y-o-y. This increase was primarily driven by a 3% increase in rents for 2-room flats. Despite the increase in rents, HDB flats remain the most affordable housing option for prospective tenants.
Amidst inflationary pressures and economic uncertainty, some private property tenants have turned cautious, leading them to consider renting HDB flats. However, these tenants typically have a competitively larger rental budget and are willing to pay slightly higher rents to secure choice units. The limited supply and higher demand for HDB flat rentals have prompted the slight uptick in rents.
Table 3: HDB Median Rents in 2Q 2024
| Town | 1-Room | 2-Room | 3-Room | 4-Room | 5-Room | Executive |
| ANG MO KIO | – | * | $2,800 | $3,400 | $3,600 | * |
| BEDOK | – | * | $2,700 | $3,300 | $3,530 | * |
| BISHAN | – | – | $2,900 | $3,500 | $3,800 | * |
| BUKIT BATOK | – | $2,480 | $2,500 | $3,200 | $3,500 | * |
| BUKIT MERAH | * | * | $2,970 | $3,800 | $4,000 | – |
| BUKIT PANJANG | – | * | $2,600 | $3,100 | $3,300 | $3,530 |
| BUKIT TIMAH | – | – | * | * | * | * |
| CENTRAL | – | * | $3,100 | $4,400 | * | – |
| CHOA CHU KANG | * | * | $2,500 | $3,100 | $3,150 | $3,400 |
| CLEMENTI | – | * | $3,000 | $3,700 | $4,000 | * |
| GEYLANG | – | * | $2,700 | $3,300 | $3,700 | * |
| HOUGANG | – | * | $2,700 | $3,200 | $3,350 | $3,600 |
| JURONG EAST | – | * | $2,700 | $3,300 | $3,600 | $3,830 |
| JURONG WEST | – | * | $2,500 | $3,300 | $3,500 | $3,600 |
| KALLANG/WHAMPOA | – | * | $2,830 | $3,800 | $4,100 | * |
| MARINE PARADE | – | – | $2,850 | $3,250 | * | – |
| PASIR RIS | – | * | * | $3,200 | $3,500 | $3,600 |
| PUNGGOL | – | * | $2,930 | $3,200 | $3,300 | * |
| QUEENSTOWN | – | * | $3,000 | $3,800 | $4,300 | * |
| SEMBAWANG | – | $2,400 | * | $3,150 | $3,300 | $3,400 |
| SENGKANG | – | $2,300 | $2,900 | $3,200 | $3,300 | $3,500 |
| SERANGOON | – | – | $2,600 | $3,400 | $3,500 | * |
| TAMPINES | – | * | $2,800 | $3,300 | $3,600 | $3,850 |
| TOA PAYOH | – | * | $2,750 | $3,500 | $4,000 | * |
| WOODLANDS | – | * | $2,400 | $3,000 | $3,300 | $3,450 |
| YISHUN | – | * | $2,630 | $3,100 | $3,300 | $3,500 |
Source: HDB, ERA Research and Market Intelligence
HDB rental demand holds firm amid moderating rents
Although rents are falling slightly, demand for HDB rentals remains strong. The number of approved applications is 9,554, representing an increase of 1.3% q-o-q, following the 3.6% q-o-q decline in 1Q 2024.
Chart 2: Number of approved applications to rent out HDB flats by flat type
Source: HDB as of 26 July 2024, ERA Research and Market Intelligence
Conclusion
Overall, the moderation in private residential rents has resulted in an increase in the number of rental contracts in 1Q 2024.
Furthermore, with 3,600 private residential units (including ECs) completed in 1H 2024, and approximately 11,300 more units expected to be completed by the end of this year, the market could see further upticks in the number of rent-ready properties. This rise in supply may lead to heightened competition for tenants, possibly softening the rental market further.
With that, ERA predicts a potential easing of private residential rental prices by up to 5% y-o-y in 2024, with the number of rental contracts ranging between 75,000 and 80,000.
When it comes to the HDB rental market, the narrowing gap between HDB and private home rents may encourage some tenants to pay a slight premium for a condominium instead. Nonetheless, the HDB rental market is expected to show resilience due to low inventory, possibly resulting in average rents growing by up to 10% in 2024.
Therefore, ERA forecasts that the number of HDB rental approvals will range between 36,000 to 38,000 contracts in 2024.
Disclaimer
This information is provided solely on a goodwill basis and does not relieve parties of their responsibility to verify the information from the relevant sources and/or seek appropriate advice from relevant professionals such as valuers, financial advisers, bankers and lawyers. For avoidance of doubt, ERA Realty Network and its salesperson accepts no responsibility for the accuracy, reliability and/or completeness of the information provided. Copyright in this publication is owned by ERA and this publication may not be reproduced or transmitted in any form or by any means, in whole or in part, without prior written approval.
