Private home rentals fall for first time in over three years in Q4

The price growth of private residential properties has slowed due to higher interest rates and multiple rounds of cooling measures, say analysts.

SINGAPORE: Private residential property rentals fell for the first time in over three years, likely due to an increase in the supply of housing, said analysts.

According to statistics from the Urban Redevelopment Authority (URA) on Friday (Jan 26), private home rentals fell by 2.1 per cent in the fourth quarter of 2023, compared with the 0.8 per cent increase in the preceding quarter.

For the whole of 2023, rentals increased by 8.7 per cent, much slower than the 29.7 rise in 2022.

URA said that rental momentum has eased across all market segments.

The rental index of private residential properties in Singapore. (Graph: URA) About 21,300 private residential units were completed in 2023, more than twice the number of completions in 2022. This was also the highest annual supply completion since 2016.

OrangeTee Group’s chief researcher and strategist Christine Sun said: "The rent drop may be due to increased competition as many private homes were completed last year, and total rental stock grew consequently.

“Tenants were also willing to move to cheaper alternatives in the public housing segment.”

She predicted that the downward pressure on rental prices may continue.

Real estate agency PropNex said the moderation in rentals can be partly attributed to increasing rental price resistance from tenants and the surge in private home completions.

“Past trends suggest that a strong completion pipeline can help to curb rental growth,” it added.

PRICES

Prices of private residential properties rose by 2.8 per cent in the fourth quarter of 2023, compared with the 0.8 per cent increase in the previous quarter.

Non-landed property prices increased by 2.3 per cent in the fourth quarter, slightly higher than the 2.2 per cent rise in the preceding quarter.

Landed property prices rebounded from a 3.6 per cent decrease in the third quarter to an increase of 4.6 per cent in the fourth quarter.

For the whole of 2023, prices of private residential properties increased by 6.8 per cent, lower than the 8.6 per cent rise in 2022.

The property price index of private residential properties in Singapore. (Graph: URA) Resale transactions fell to 11,329 for the whole of 2023, compared with the 14,026 resale transactions in 2022.

Mr Lee Sze Teck, senior director of data analytics at Huttons, said rising resale prices for private homes and high interest rates have continued to constrain transaction volume.

“Some price sensitive buyers were priced out of the market. Since interest rates were raised in 2022, resale transaction volume has been declining,” he added.

Ms Sun added that the multiple rounds of property cooling measures, price resistance and slower overall demand affected private homes’ price growth last year.

The government has introduced three rounds of property cooling measures since 2021 - the latest being in April last year.

Related:

Singapore private home prices rose at slower pace of 6.7% in 2023

Property resale market stabilising, may have peaked: PropertyGuru report OUTLOOK

Ms Sun said she expects the private property market momentum to continue in 2024.

“Although property curbs are in place and buyers are more cautious due to cost concerns, the market is expected to remain stable,” she added.

CEO of PropNex Realty Ismail Gafoor said buyers are taking a careful approach, with market uncertainties still present.

“We may see buyers returning as they gain more clarity of the market in the months ahead,” he added.

“Despite the cooling sales volumes last year, overall private home prices have held up, which suggests that the market is still resilient.”

URA urged buyers to “exercise prudence” when taking on new financial commitments, including long-term mortgage debt servicing obligations.

Global economic activity is expected to ease further into 2024, with domestic mortgage rates at elevated levels, said the authority.

Source: CNA/rl(mi)