SINGAPORE: Due to economic uncertainties and an increase in home supply, the rent for private homes has started to hit a plateau, according to a report by Savills Singapore.
The consultancy said in its report that the rental index of non-landed private residential properties rose at a “much slower pace” of 0.2 per cent in the third quarter of this year, compared to a quarterly growth rate of 1.4 per cent to 8.3 per cent since Q1 2021. The consultancy firm also added that the average monthly rent of high-end non-landed homes tracked by them dipped 0.6 per cent quarter on quarter to S$6.16 per square foot (psf) per month in Q3. This was the first rental drop for such properties, which have booked accumulated growth of 51.9 per cent for the last 2.5 years.
The Core Central Region (CCR) market was hit with the biggest y-o-y decrease of 10.4%. This was followed by a 10.1% decline in the Rest of Central Region and a 9.0% decline for the Outside of Central Region market, an article by EdgeProp reported. The growth of rents slowed for all market segments. Rents of non-landed properties in the CCR declined by 1.7% q-o-q for the first time since 1Q2021. This indicates that rents have reached a plateau, particularly in the high-end market segment.
For 2023, Savills expects non-landed rents to rise 10 per cent from 2022, given the strong showing in the year’s first half. But the following year, the consultancy predicts a general rent decline of around 5 per cent. This is mainly due to economic headwinds in Europe and Asia, which may affect the number of foreign workers multinational companies wish to station in Singapore, it said. There is also a surge in private home supply, with 17,000 new completions in 2023 and another 9,900 units in the following year, said Savills.
In the final quarter of 2023, Singapore’s property market deals with economic changes, global uncertainties, and geopolitical tensions. As the country’s economy maintains stability amid challenges, the property sector grapples with cautious market sentiment influenced by economic slowdowns and geopolitical tensions.
Throughout 2023, there has been a gradual tapering in overall demand for properties, primarily driven by high interest rates and cooling measures. The Singapore Property Sale Demand Index, tracking the number of enquiries of all property sale listings on PropertyGuru Singapore, experienced a sharp decline of 14.4% quarter-on-quarter (QoQ) from Q2 2023 to Q3 2023, approaching pre-pandemic levels. Landed homes, known for their higher quantum, faced the steepest demand drop, with the Sale Demand Index falling by 17.3% QoQ. This underscores the adaptability of property seekers to market conditions and regulatory changes.
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