PropertyGuru reported that private landlords’ asking rents in Singapore had been declining since the end of 2023. Rental demand was easing and supply increasing, according to the report.

The study was published in late march and showed that asking rentals – which are the rents shown in listings on PropertyGuru – consistently declined in 2023. The correction in asking rentals in October, November and December resulted in a dip in the transacted rents as well.

Both asking and sold prices have seen significant increases over the past two years. Rents for private non-landed houses have increased by 38.8 % between Q4 of 2021 and Q4 of 2023, based on the Urban Redevelopment Authority’s index.

PropertyGuru’s portal increased the median asking rate by 27,3 percent between January 2022 and Dec 2023. The median transacted-rent, however, rose by 35.3%.

The decrease in rents coincides with a easing of rental demand, and a surge in availability in the last year to two.

According to PropertyGuru data on engagement – an indicator of home demand that is measured by visits, time spent looking at the listing and agents – the rental market dropped nearly 70% in December from its July 2022 high. In the meantime, the number and quality of listings on PropertyGuru has been increasing since January 20,23. This is a 62.9% increase over the course of the year.

It’s possible that landlords expecting higher rents from tenants in the second-half of 2023 would have faced longer wait times to lease their properties or might have done so at a lower cost.

In 2023 the gap between asking and transacted rental rates began to close.

The narrowing gap reflects a shift on the rental markets, where more landlords have decided to refrain from increasing their rents. This trend was probably influenced by the fact that rental properties remained on the marketplace for longer periods. Landlords then adjusted their expectations so they aligned with market conditions, and tenants affordability.

Singapore is not all bad news.

The rental listings of District 9 (Orchard Valley, River Valley) had the highest visitor rates and renter interest. They also saw an increase in market friction.

The Continuum condo

This may indicate that the local rental market has a higher demand than it can supply. Renters are likely to be more competitive in this market.

In March of last year, renters in District 9 also sought a median rent of S$6,000 per a month. Rents at the 25th and 75th percentiles were S$4,000 and S$8,800 respectively.

99.co revealed that the average rental for a two bedder at The Sail @ Marina Bay, a popular project in the Core Central Region, was S$6,656 per month in January. It was a rise of 2.4% from January 2023, when the rent was S$6,499.

Stirling Residences (a popular project in Rest of Central Region) was S$4,620 for January 2024. That’s down 7.2% compared to S$4,979. Parc Riviera in Outside Central Region had an average monthly rent per two-bedder of S$3,740 for January 2024. This was down 8.2% from January 2023’s S$4,072.

The rental industry is at a pivotal point. The extent of any correction would be difficult to predict, given the uncertain market.

According to SRX and 99.co’s Thursday flash estimates, condominium rental rates rose by 0.3 percent in March, after seven straight months in decline.

Despite the recent increase in rents, the drop in rents may not be significant.

Rent correction is also affected by the attributes and location. It may be affected by older units and those in less desirable locations. Rents remain high in certain projects such as those located in desirable locations or newer developments, like Klimt Cairnhill freehold condominium in District 9 in District 9.

Rents are declining less for smaller apartments and units. This could be due either to an increase of enquiries or to landlords’ resistance to further lower rents. Despite the limited supply, demand for larger-sized bedrooms continues to hold steady.