A sudden change in the leasing market due to the increase in inventory, slowing economy, and price resistance have affected the demand. According to figures provided by the Urban Redevelopment Authority, 56,098 residential rental agreements (excluding executive condos, or ECs) were signed during the first eight months of 2023. This is significantly lower than the 61.801 contracts that were signed in 2021 as well as the 66,603 contracts in 2022.

At the start of 2023, a lot of tenants were reeling from soaring rents as landlords passed on the additional costs incurred by higher-priced mortgages and more expensive living expenses. After witnessing the massive rise in rental costs Renters are reaching a breaking point.

According to URA rental data The median monthly rent for all condominiums (excluding ECs) was $5.16 per square foot (psf), a stagnant rate in comparison to a month ago. Comparatively, median rents rose by 14.2 per cent over the same timeframe one year ago.

Luxury condominiums’ median rents probably reached their peak in April 2023 at $6.11 per sq ft. month. median monthly rents were lower during the following four months. Rents for RCR and OCR might not have risen to their highest levels. Prices for rent may continue to rise because condominiums are being built and owners demand higher rents.

Tenant competition for housing units started to slow down with the increase of condominium completions in the second half of 2023. Since then, the mood has mellowed as there has been a decline in inquiries and inspections of properties by potential tenants.

The market for rental is battling some headwinds from a confluence of factors, like lower demand for domestic goods and a rising housing supply. This is stark contrast from a year ago when a surge in demand drove rents by nearly 30%, the fastest rate of growth in 2007.

After a streak of annual increases, are rent prices in the process of adjusting or is the current slowdown only temporary?

In some submarkets, the rental market has already begun to show signs of correction.

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Landlords might find some positives. The cost of having several properties has risen due to cooling measures, which has led to a rise in HDB upgraders to rent prior to buying the private residence.

Rent-price differences between landlords and tenants remain vast, leading to fewer bargains. Rent prices surpassed records and hit new heights during the 2023 second quarter. Limited housing supply enabled landlords to request higher rents since the risk of losing tenants was low.

The prime segment, also known as the core central region (CCR) was the one that was most affected. Demand dropped by 11.5 percent over the first eight months of 2023. This was followed by the suburbs, or outside of the central region, which saw a depreciation of 10.5 percent, and the city edges, or the remainder of central regions in which it fell by 5.8%.

The rate of vacancy for completed private residential units has increased from 6 percent in the first quarter to 6.3 percent in the second quarter 2023.

Consequently, some tenants chose less expensive housing on the housing market that is public and others opted to move out of Singapore completely.

The market for private rentals has finally seen a slight decrease. After two years of constant price increases, rents appear to have stabilized as growth rates stagnated for more than six months.

Between February and August 20,23, median rents of luxury condominiums dropped 2.9 percent to $5.71 per square foot per month. Meanwhile, median rents of city-fringe condominiums in RCR decreased by 1.3 percent to $5.36 per square foot per month. The median rent of suburban condominiums in OCR increased by 2.3 percent up to $4.54 per square foot for a month.

In the first half of 2018 there were more than 8,000 residential units, including ECs were built. The number of units built had nearly tripled when compared to times in 2022 (3,501 units) and 2021 (3,550 units).

Rental prices are under pressure due to the rise in supply. There are more choices for home owners and a steady flow of new homes coming onto the market for sale.

Some businesses are less optimistic about their hiring plans for 2024. A slowing economy and an unfavourable global outlook could cause a downward pressure on rent prices.

During the Covid-19 epidemic, a significant number of residents rented apartments due to delays in the construction of new housing units. Tenants who waited for their HDB or private units to be finished are moving into their new home.

It’s been hard to accept that there are fewer tenants to choose from and more competition. A lot of landlords have remained loyal to their asking prices that are high despite a slowing market and the prospect of a rising housing supply. They are reluctant to reduce the price of their homes because of rising costs and the higher cost of mortgages.

The supply of public housing has also grown in the last few years, as more have reached their maximum occupancy time. As renters in the local area slowly leave the market, the existing inventory will continue to increase. The increased supply will help reduce the intense competition to secure homes among tenants.

The rising resales prices will cause more landlords to dispose of their properties and help reduce the rental stock. If the global economy performs better than anticipated it is possible for expatriates to relocate to Singapore, supporting the market for rental.

The long-term and mid-term rent-price trajectory will depend largely on the performance of the broader economy. The bad news regarding the Chinese economy, and the hawkish stance of the US Federal Reserve have already had a negative impact on business confidence.

In light of the mismatch between tenants’ and landlords’ expectations and the market is undergoing adjustments the rental market could decrease. The seasonal slowdown at the close of the year could be a contributing factor.

If the market shifts towards tenants and rents decrease further, the market could get more active next year, in the event that more tenants renew or sign new leases that offer cheaper rents. Tenants may prefer leases with shorter terms if they expect future rent price reductions that could result in more transactions.