Goodwood Residence sets new record of $2988 per sq. ft.
In the Covid-19 pandemic that was in the news, there was a large number of locals renting apartments due to delays in construction for new housing units as well as the need to work from home. Tenants who waited for their HDB or private units to be built are now moving into their new home.
Rent-price trends in the midlong- and short-term will be largely determined by the overall performance of the economy. Business confidence has already taken a hit due to negative news about the Chinese economy, as well as the more hawkish US Federal Reserve stance, which signalled another rate hike and tighter policies in monetary policy.
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 changed with a drop in the number of inquiries and visits to homes by prospective tenants.
The combination of lower demand for homes as well as an increase in the supply of housing have created some issues for the rental market. This is in stark contrast to a year ago, when a surge in demand drove rents by nearly 30%, which is the fastest annual growth since 2007.
The gap in rent between tenants and landlords remains large, resulting in fewer deals. Rent prices broke records and reached new heights during the 2023 second quarter. The higher rents were due to the low rental housing stock, since landlords did not need to worry about losing tenants.
At the start of 2023, many tenants were struggling with the rising rents, as landlords passed on the higher costs of higher mortgages and more expensive living expenses. Renters are at the breaking point following the huge run-up in rent prices.
The primary segment, also known as the core central region (CCR) was the hardest affected, as demand fell the greatest – by 11.5 percent – year-on-year for the first eight months of 2023. This was followed by depreciation in suburbs or the outside of central region (OCR), of 10.5 percent and in the city fringes or the central region (RCR), by 5.8 percent.
After a string of annual increases, are rent prices undergoing a correction or is this only temporary?
As more local families give up their rental units The vacancy rate for finished private residential units climbed upwards from a mere 6 percent during the first quarter to 6.3 per cent in the second quarter of 2023.
In certain submarkets, the rental market has already begun to begin to show signs of a correction.
The leasing market has experienced an abrupt reversal due to the result of the economy’s slowing as well as the increased inventory and the resistance to price increases. Based on data from the Urban Redevelopment Authority (URA), 56,098 rental contracts (for all residential properties, except executive condos or ECs) were recorded in the first eight months of 2023. This is well below the contracts inked for the same timeframes in 2022 at 61,801 and in 2021, 66,603.
The median rental for condominiums, which excludes ECs and ECs, remained steady at $5.16 per sq ft (psf) per month in August 2023, compared to six months prior as per URA rental information. In comparison, median rents increased by 14.2 percent over the same timeframe a year ago.
In the first quarter of 2018, more than 8,000 residential units, including ECs were completed. The number of units built had nearly doubled in comparison to the same periods in 2022 (3,501 units) and 2021 (3,550 units).
Certain tenants have decided to move from Singapore Some tenants decided to rent lower-cost housing on the public housing markets.
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From February through August 20,23, median rents of luxury condominiums dropped 2.9 percent, to $5.71 per square foot for a month. In addition, the median rents of city-fringe condos in RCR dropped 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.
The number of housing units in public has also risen, as a growing number have reached their maximum occupancy time. Existing stock will continue to build up as renters in the local area slowly leave the market. This will ease the fierce competition for homes between tenants.
The news of a shrinking pool of tenants and an increasing amount of competition has not hit home. A lot of landlords have remained loyal to their hefty asking prices despite a slowing market and the prospect of a rising housing shortage. They are reluctant to reduce their asking price because of rising costs and higher mortgages.
The rental market is under pressure due to the rise in supply. There are more options for homes with a steady stream of new homes coming onto the market for sale.
The activity in the market could rise in the coming year, if tenants renew or sign new leases that offer lower rents. Tenants might opt for leases that are shorter in the event of more rent price adjustments that could result in more transactions.
In the event of rising prices for resales, it will encourage landlords to buy their homes and help decrease the rental inventory. If the global economy performs better than we anticipated, we may expect expatriates to return to Singapore which will help the rental market.
Median rents for luxury condominiums likely peaked in April 2023 when they reached $6.11 per month, based on median monthly rents were lower for the next four months. Rents in RCR and OCR could not have reached highest levels. Rent prices will likely to increase as condos are constructed and owners seek higher rents.
Landlords might find some positives. The cost of owning several properties has increased because of cooling measures that resulted in higher HDB upgraders to rent prior to buying the private residence.
Some firms are less sanguine about their hiring expectations for 2024. The cost of renting could be affected by a slower economic growth or a less optimistic outlook for the global economy.
The market for private rentals has finally seen a slight decrease. Rent prices have stabilized following two years of continuous rises. The rate of growth has remained stagnant for more than six months.
Rentals could decrease further due to the mismatch in expectations between landlords and tenants, and the fact that the market is going through a period where it adjusts. This could coincide with the annual slowdown that occurs in the final quarter of this year.