Private housing rents likely to soften in 2H2023: Savills

Private residential rents are expected to soften in the second half of 2023, despite seeing a 7.2% quarter-on-quarter increase in the first quarter of the year, according to Savills Research.

Indications of a slowing leasing market can be seen in the declining figures from the URA, showing that private rental transactions were down 11.7% year-on-year, while HDB rental applications declined 5.2%.

Rents of high-end non-landed residential properties rose 4.7% q-o-q to $6.11 psf during the first quarter, though this was a slower rate of growth than the three previous quarters. Savills also noted that in mid-February, there was an increase in the slack of rental demand, particularly for properties with a monthly rental amount of less than $10,000.

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Looking ahead, the consultancy expects rents to soften further due to an increase in the supply of new homes, with approximately 17,600 private dwellings estimated to be completed this year. This is in contrast to the 9,000 units completed in 2022. On the demand side, the economic issues facing tech and other companies may reduce the demand for rental properties from foreign talent.

Marcus Loo, CEO of Savills Singapore commented that the increased supply of private residential projects will ease the rental pressure for both locals and expatriates, allowing them greater ease of mind with regards to their accommodation plans.

Savills is maintaining its rental growth forecast for 2023 at 5% to 10% for mid-tier and mass market segments, and for luxury apartments, the rental are expected to increase by 10% to 15%. This is attributed to foreign high-net-worth individuals, who in light of the newly introduced 60% Additional Buyer’s Stamp Duty levy, may opt to rent while waiting for permanent residency or Singapore citizenship.