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Singapore Rental Market: Will Rental Prices for HDB and Private Properties Come Down in 2023?

Cheryl Chiew
Singapore Rental Market: Will Rental Prices for HDB and Private Properties Come Down in 2023?
If you rent in Singapore or are thinking about renting a place, you’ve probably kept a close eye on the Singapore rental market. Chances are you’ve complained and muttered something that rhymes with “duck” when looking at listing prices.
Throughout the COVID-19 pandemic, rental prices have surged. Current rental prices are at a 15-year high. Some tenants have seen their rental prices increase by up to 70%, leaving expatriates feeling “overwhelmed, defeated” when house-hunting.
But what goes up must surely come down. Will rental prices come down in 2023? Good news: according to the Singapore Property Market Report Q2 2023, rental price growth is starting to moderate.

Watch Our Video on What Singaporeans Think of the Singapore Rental Market

In this article, we’ll take a look at what’s happening in the HDB and private rental markets. But before we start, here’s a quick recap on the Singapore rental market and what caused rental property prices to soar in the first place.

Why Rental Prices Shot Up Throughout the COVID-19 Pandemic

Traditionally, the Singapore rental market is driven by expatriates who tend to seek out non-landed private properties. The start of the COVID-19 pandemic saw a dip in Singapore’s non-resident population as expatriates returned home and lay-offs occurred.
However, this trend reversed in 2021, as the technology and manufacturing industries began to hire aggressively again. At the same time, construction delays pushed young families who were waiting for their homes to be completed into the rental market. This group included first-timer families waiting for their BTO flats and HDB upgraders waiting for their private homes to be completed.
Enduring work-from-home arrangements also pushed young singles and unmarried couples who craved more independence and space towards renting their own space. The tight supply and high demand created a ripe recipe that pushed up rental prices and kept them buoyant as more turned to the Singapore rental market to meet their housing and space needs.
What was the final nail in the coffin (for affordable rental prices, R.I.P.) was the quick succession of interest rate hikes by the US Fed. These moves saw borrowing costs increase quickly throughout 2022. To cover the costs of financing their property, landlords raised their asking prices and didn’t lower them because they had the financial muscle to hold out.

Rise in Private Property Rental Prices: URA Rental Index (Q1 2020 to Q1 2023)

When we take a close look at the Singapore rental market, it’s easy to see how it currently is truly a landlord’s market.
Here’s the rental price index for overall, non-landed and landed private properties and how they have increased over the course of the pandemic. Click on the labels to toggle the view.

Examining the Singapore Rental Market: Rise in HDB Flat Rental Prices

Rental prices of HDB flats have risen to record highs. Looking at the median rents for the 3-room, 4-room, and 5-room flat types, some HDB towns have seen 50% increases in the past 2.5 years.
HDB property rental prices soared over the course of the pandemic, with the median rental prices seeing 12 consecutive quarters of increase.
So what’s in store for the HDB and private property rental markets? Let’s take a look at how the Singapore rental market has played out so far in 2023.

What’s Happening in the Singapore Rental Market in 2023?

A look at the Singapore Property Market Report Q2 2023 revealed that median asking prices for all rental listings on the PropertyGuru website have increased at a slower pace. The number of enquiries has dipped for the second quarter in a row.
Tl;dr, what this means:
  • Prices are going up less quickly in the Singapore rental market
  • The fewer number of listing enquiries could mean there are either fewer people looking to rent, more are turned off by the high prices and don’t bother asking about properties out of their budget, or both
These are telltale signs that we have reached or are reaching a peak for rental property prices.

What to Expect in the Singapore Rental Market in 2023

1. More BTO Flats Completed

As BTO construction delays continue to alleviate, more young families are moving into their newly-completed BTO flats. As the HDB rental market is largely driven by locals, this easing demand is expected to put downward pressure on HDB rental prices.
According to the Singapore Property Market Report Q2 2023, HDB rental demand shows signs of slowing. Aside from the reduced pressure on the HDB rental market, the big dip in demand also likely stems from the high asking prices putting off prospective tenants.

2. Renters Looking for More Affordable Options in the Singapore Rental Market

Interestingly, some expatriates have turned towards renting HDB flats over private properties to combat “‘crazy’ rental hikes for condo units”. Still, demand from this foreign tenant pool is unlikely to have a significant impact on the HDB rental market as their numbers are not large. However, we are keeping an eye on this trend.
As it is, renters are already seeking properties located further away from prime locations or are going for older units to combat the still-high rental prices. We expect this trend to continue across HDB and private property rentals.

3. 19,000 Condos to Be Completed in 2023

In Q1 2023, asking rental prices for private residential homes continue to increase. But like the HDB rental market, demand has eased and price growth is moderated. But the good news is the surge in condo rents appears to be slowing too as supply is set to be restored.
The number of rental listings on the PropertyGuru website in March 2023 has more than doubled compared to the same period last year. In part, this is thanks to the number of condominiums that received their Temporary Occupation Permit (TOP) in 2022. Another 19,000 new private residential homes are also expected to be completed this year.
Dr Tan Tee Khoon, Country Manager – Singapore, PropertyGuru, agrees that renters may see some reprieve in rent moderation given more completed units available for lease, especially toward the end of the year.

4. Landed Private Property Rental Asking Prices to Moderate

Those who rent condos have seen the most dramatic surge in their rental prices. But asking rental prices for landed private properties have seen significant growth over the course of the pandemic too.
Most landed private properties are rented by foreigners. As foreigners return to Singapore, asking prices remain propped up due to the enduring preference for more space as well as the prestige and exclusive status these landed rental addresses bring.

5. Landlords to Lower Their Asking Rental Prices

While landlords may be reluctant to lower their asking prices in the face of rising costs, they may have to give in to market pressures. Dr Lee Nai Jia, Head of Real Estate Intelligence, Data and Software Solutions, PropertyGuru Group, advises that “it would be beneficial for rental property owners to take a more realistic approach to pricing and focus on retaining their current tenants.”
“As we have seen in the past, an influx of new rental supply can put pressure on the market, making it more difficult to attract new tenants while potentially causing existing tenants to seek out more affordable options. By prioritising tenant retention and offering fair pricing, rental property owners can not only maintain a stable occupancy rate but also foster a positive reputation in the market.”

Renting in Singapore in 2023

Despite the 100,000 private and public homes set to be completed between 2023 and 2025, there is still a lagged effect. Demand remains strong and the supply crunch endures in the immediate term, keeping the Singapore rental market resilient and rental prices buoyant.
But renters, do not despair, there is light at the end of the tunnel.
More are resisting price increases and there will be more supply entering the Singapore rental market. Additionally, the high rental rates have motivated more homeowners to sublet their excess rooms or units, thus increasing rental listings.
While the upward trend of rental prices is not likely to subside in 2023, rental prices are expected to gradually stabilise. But the question of when remains uncertain in the current volatile economic climate, its effects on the inflow of foreigners, and the rate of project construction.
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