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Shifting Rental Landscape: Exploring Singapore's Housing Market Changes In 2023 & Beyond

Singapore is currently experiencing a significant downturn in rental rates, marking the first decline in four years. The housing rental market, which has seen a decade-long rally, appears to be reaching its conclusion. Private condominiums have been hit the hardest, with rental prices declining by 0.5% in September. While the Core Central Region saw minimal increases, other regions experienced declines of 0.2% and 1.3%. This drop in rental prices during Q3 can be attributed to the closing demand-supply gap in the market.

As more residential properties are completed, rents are expected to continue easing due to moderating demand and increased supply. The departure of foreign nationals from Singapore has had a significant impact on the private condominium market. Rising rents and high inflation rates have led some foreigners to consider cost-cutting measures or even leaving the country. This has resulted in a decline in rental prices for private condominiums.

The rental housing market in Singapore is experiencing changes due to the pandemic and other factors. As the demand for rental properties decreases, there is an excess supply of homes. In 2023, the number of new homes built doubled compared to the previous year. However, it will take time to balance the supply and demand as the surplus exceeds the average of the past 10 years. Additionally, more new homes will be introduced to the market next year in 2024, which will further impact rental prices.

It is projected that residential rents in Singapore will decline by up to 10 percent in 2024, following a significant increase this year. This decrease could be even more significant if the macro-economy worsens. Tenants are likely to resist high rental prices due to higher vacancy rates, more housing options, macro uncertainties, and the rising cost of living. Fortunately, the burden of high rents is already easing. The government’s index for private housing leasing costs recorded a modest increase in the third quarter, the slowest growth rate since 2020.

The anticipated drop in rental prices will provide relief to tenants in Singapore, which is known as one of the most expensive cities for luxury living. Last year, leasing costs increased sharply by 30 percent as Singapore reopened its borders during the pandemic.

The demand for public housing in the local area is steady, but there has been a noticeable decrease in rental demand from foreigners. This decline raises concerns and warrants attention from the Singapore government. It is important for the government to reassess policies in the rental housing market to ensure a balance between local demand and foreign investment. The rental housing market in Singapore is influenced by global economic and social trends, requiring careful monitoring and decision-making by real estate stakeholders.

Overall, these changes in the rental housing market present both challenges and opportunities for tenants and real estate stakeholders alike.

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