Singapore HDB rental market growth slows in H1 2024 but soars in H2 amid surge in condo moves and strategic upgrading

SINGAPORE: In the first half of 2024, growth in HDB rents moderated to just 1.4% year-on-year, according to a report by Huttons and published by the Singapore Business Review.

The slowdown is attributed to a shift in tenant preferences, with many opting to move into condos. Additionally, the supply of available flats during this period was lower, contributing to the deceleration in rent increases.

Surge in HDB flat launches, impressive take-up rates

However, rental demand strengthened in the latter half of 2024.

Huttons noted a surge in HDB flat launches, with some achieving impressive take-up rates, ranging from over 50% to as high as 99%.

This uptick in launches was largely driven by HDB upgraders—residents who sell their flats but choose to rent temporarily to avoid paying the Additional Buyer’s Stamp Duty (ABSD) on a second property.

Forecast for 2025: Fewer HDB flats available for subletting, but new launches expected to boost rental demand

Looking ahead, Huttons estimates that the number of HDB flats rented out in 2024 will be approximately 37,500, a decrease of 4.2% compared to the 39,138 flats rented in 2023.

HDB rents are expected to increase by up to 4% in 2024, a much more modest growth than the 10.1% surge in 2023. The outlook for 2025 suggests that rental supply will further tighten.

Huttons forecasts that the number of HDB flats eligible for subletting after meeting the 5-year Minimum Occupation Period (MOP) will drop to around 7,000 units.

In addition, the completion of private residential homes is expected to decline to just 5,300 units, which means fewer tenants will move into newly completed condos, further reducing rental options.

On the bright side, the launch of over 6,500 residential units in the Rest of Central Region (RCR) and Outside Central Region (OCR) is expected to drive additional demand for HDB flats in the interim as more upgraders enter the market.