SingHaiyi Group’s 1,400-unit Park Clematis was the largest project completed last year. (Image: Shinhaiyi)
Private residential rents in Singapore fell 2.1% from the previous three months in the fourth quarter, the first decline since 2020, as developers launched more homes in 2023.
According to the newspaper’s statistics, rents have stopped rising for 12 consecutive quarters since a 0.5% decline in the third quarter of 2020, and the previous quarter’s decline was the first in more than 14 years, or the largest since a 5.2% decline in the second quarter of 2009. became. The Urban Redevelopment Authority (URA) made the announcement on Friday.
The decline in rents erased the 0.8% increase recorded in the third quarter, resulting in full-year lease growth of 8.7% in 2023, after rents soared 29.7% in 2022. Analysts are tying the downturn in rent growth to developers. The number of new homes sold in Singapore last year doubled to 19,968, a seven-year high, and homebuyers rented out many of those properties.
Wong Siang Yang, head of Singapore and Southeast Asia research at Cushman & Wakefield, said: “Rents for private housing have fallen in a sign that the rental market has peaked. “This is because they have relaxed their expectations for rentals.” “Increasing rental supply and increasing tenant resistance could lead to a gradual decline in rents of up to 5% in 2024.”
Rent has increased by 60% in 3 years
The latest drop provides some relief to tenants, as rents have increased by an average of 58.8% since the second quarter of 2020, according to URA statistics. Tricia Song, head of Southeast Asia research at CBRE, expects occupiers to expect rental growth to continue moderating in the first half of 2024 as the market digests projects launched last year.
URA Chief Executive Officer Lim Eng Hwee
The luxury housing market was the hardest hit last year, with rents for land properties including terraced houses, semi-detached houses, bungalows and shophouses falling 4.1% in the fourth quarter compared to the previous three months, according to URA data. , reversing from a 4.4% decline. We made a profit in the third quarter.
Condo and apartment rents also fell from October to December, down 1.8% from the end of the second quarter, after rising 0.2% in the previous three months.
Last year’s surge in supply was driven by a surge in projects obtaining temporary occupancy permits. His three largest projects are the 1,468-unit Park Clematis in Clementi, the 680-unit Sengkang Grand Residences in District 19, and his 592-unit Amber Park luxury development by City Developments on the east coast. .
“The rapid increase in new home completions has enabled homeowners who were temporarily displaced by construction delays to exit the rental market and move into newly completed homes,” JLL said. said Singapore Housing Research Director Chia Siew Chu Ying. “At the same time, the increase in leasing options gives potential tenants an advantage in lease negotiations.”
Mr Chia expects luxury residential rents to remain depressed in the first half of the year due to the difficult macroeconomic backdrop and rising supply levels, while rental growth in the mass market may slow. There is. He expects housing rents across the market to rise by up to 3% a year.
Housing prices to ease further
Final statistics on new private home sales released by URA show that prices rose slightly faster than originally expected, posting a 2.8% growth in the fourth quarter. In contrast, preliminary figures released at the beginning of the month estimated a growth of 2.7%.
The final home price growth rate for all of 2023 was 6.8%, higher than the preliminary estimate of 6.7%, but still below the 8.6% increase in 2022 and the 10.6% increase in 2021.
The slowdown in Singapore’s house price growth coincided with a 9.6% decline in private home sales in 2023, with buyers buying 6,421 homes compared to 7,099 in 2022, a 15-year low.
House prices are expected to moderate this year as more homes enter the market, with JLL predicting developers will launch more than 12,000 homes this year.
“We expect the housing market to have a soft landing in 2024, as price and rental growth slows but does not collapse. Household balance sheets are resilient and there is low unsold inventory. , prices are unlikely to correct significantly,” CBRE’s Song said.
Cushman & Wakefield expects house prices to rise by up to 3% this year, while JLL expects them to rise by up to 5%.