Singapore Residential 2H/2023

Singapore Residential 2H/2023

Rents are starting to level off for a period of consolidation in 2024

The Singapore private residential leasing market had been on a tear since the beginning to 2022. From Q4/2021 to Q3/2023, rents for both landed and nonlanded private residential properties rose 44.0%. For the non-landed segment, rents rose 41.3% over the same period. However, since the start of 2023, the rate of increase for the rents for non-landed properties begun to slow and the quarter-on-quarter (QoQ) change in the third quarter was just 0.2%.

Extracting the Q3/2023 rents for nonlanded homes and breaking them down by bedroom types and by districts, we see a better spectral of colors surrounding the state of the rental market. After removing outliers (defined as observations outside of two standard deviations of the dataset), rents for non-landed properties in general remained relatively flat with a slight 0.2% decline QoQ for all bedroom types (1 to 5 bedrooms) and by the 25th, 50th and 75th percentile. By market segment, rents fell in all three market segments. Rents fell 0.5% in the Core Central Region (CCR – Luxury segment), 0.4% in the RCR (Rest of Central Region – Mid-tier segment) and 0.1% in the OCR (Outside Central Region – Mass Market segment).

By bedroom types, rents for the 1-, 2- and 5-bedroom types fell by between 0.8% to slightly over 3.0% on a QoQ basis. Rents rose for the 3- and 4-bedroom types by 0.8% and 3.3% respectively. However, due to the paucity of transactions for the 4- and 5-bedroom types, one can expect less confidence in reading off the numbers for these unit types. Notwithstanding the fact that vacancy rates have been rising throughout the year, on a year-to-date (YTD) basis, rents still managed to rise 7.3% and even on a QoQ basis, the 0.2% decline was not precipitous. This is despite the vacancy rate having pierced the 6% normal vacancy rate from below. The CCR recorded a 5.7% increase while the RCR and OCR rose 7.1% and 8.1% respectively. Confining the analysis to the popular 1-to-3- bedroom types, rents rose 6.8% for the CCR, 8.2% for the RCR and 8.5% for the OCR, with the overall increase at 7.9%.