Market Watcher Series Issue 52 Private and HDB Rental Market Outlook 2024

RENTS STABILISE AS MARKETS CONTINUE TO SOFTEN
Rental prices for both the private residential and HDB markets are expected to stabilise in 2024 as both markets continue to soften. The private rental market may experience a further slowdown as domestic demand contracts. HDB rental volume may similarly decline on lower supply.


Limited upside for private rents in 2024. The private rental market has entered a clear slowdown in the second half of 2023, which is particularly evident in the luxury market. Perhaps rent prices have risen too significantly over the past two years, driven by a lack of housing supply and strong local demand during the pandemic. 

However, the supply ramp-up of around 28,600 new private residential properties (excluding executive condominiums or EC) completed from 2022 to 2023 has taken a toll on the rental market. This was accompanied by domestic demand contracting sharply as many locals exited the leasing market after moving into their new homes.

Housing supply is expected to drop in 2024, with nearly 10,000 new homes slated for completion. Most of these new homes will be located in the prime areas or the Core Central Region (CCR) at around 4,100 units. Slightly over 3,900 homes will be completed in the city fringe or Rest of Central Region (RCR).  


Landlords in the city fringe areas will face steeper competition for tenants as almost 16,000 new homes will have been completed from 2022 to 2024. Similarly, for the luxury segment, the total new completions in CCR will be around 7,700 over the same period. However, we anticipate that more foreigners may rent private homes in prime locations since they incur a 60 per cent Additional Buyer’s Stamp Duty (ABSD) should they purchase a residential property. The increased foreign demand may mitigate a sharp rental correction in the CCR. Moreover, supply for CCR homes is set to fall more steeply after 2024 compared to RCR and OCR.

Rental prices in the suburbs or Outside of Central Region (OCR) may rise further, supported by less home supply. The number of completions in OCR will fall substantially from around 10,000 units in 2023 to approximately 1,800 units in 2024.

Overall, it is anticipated that the downward pressure on rental prices may continue, and the rental price growth is expected to slow from the 29.7 per cent increase in 2022 to around 12 to 14 per cent in 2023 and 2 to 5 per cent in 2024. As domestic demand for rental properties continues to shrink, overall rental transactions may fall below its 10-year average of 81,474 units to around 75,000 to 80,000 units in 2023 and about 70,000 to 75,000 units in 2024.  


Rental prices for HDB flats are projected to stabilise in 2024. In 2023, there was a substantial reduction in flats reaching their five-year Minimum Occupation Period (MOP), causing a spike in HDB rents. The number of MOP flats dipped from 31,325 units in 2022 to 15,748 units in 2023. Simultaneously, demand for HDB flats surged, with more tenants opting for affordable housing. 

Looking ahead, rental stock is expected to dwindle further, with the number of MOP flats slipping to 13,093 units in 2024 and 7,454 units in 2025. Further, rental inventory may shrink since the rise in the Additional Buyers’ Stamp Duty for buyers holding multiple properties will continue to discourage homeowners from keeping their flats for rental income. On the demand side, local tenants may continue to shrink while others may shift back to the private market should private rents continue to moderate. However, foreign demand may rise should the job market improve next year. 


Rent prices are projected to stabilise in 2024, with a slight increment of between 1 and 3 per cent amid a tighter housing market. Flats in city fringe areas could experience more rental growth as fewer flats will reach MOP next year, with the highest completions in Toa Payoh at 1,286 units, Geylang at 642 units and Queenstown at 489 units. Comparatively, 2,023 units were completed in the city fringe Bukit Merah and 1,179 units in Queenstown in 2022.

As rental stock continues to fall, the number of rental applications may shrink in tandem. Coupled with some demand possibly being diverted to the private market, we estimate that HDB rental volume may dip from 36,000 to 38,000 units in 2023 to around 33,000 to 35,000 units in 2024. 











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