Singapore observes a slowdown in housing rentals

Singapore observes a slowdown in housing rentals

Lower domestic demand and supply at Treasure at Tampines, together with rising interest rates, are anticipated to stabilize private and public housing rents next year on all units of Treasure at Tampines Floor Plan.

According to the real estate agency and consultancy group’s Treasure at Tampines Showflat 2024 research, which was issued on November 28th, private property market rentals, especially in the luxury market, have slowed in 2H 2023.

Since last year, there has been an increase in the supply of around 28,600 finished private residential homes (excluding executive condominiums), which is likely the reason for this. Simultaneously, demand has plummeted due to a large number of residents leaving the rental market in favour of their freshly built houses.

Going forward, only over 10,000 new residences are scheduled for completion in 2019, which means the supply of private residential housing is projected to decrease. Nearly 4,100 of these apartments will be situated in the desirable Core Central Region (CCR).

Also, since foreigners would have to pay a hefty extra buyer’s stamp duty (ABSD) of 60% if they bought a house in the CCR, the market for such properties is expected to rise. Private property rental rates in the CCR could rise as a result of several causes.

Next year, over 3,900 new residences will be finished in the Rest of Central Region or on the outskirts of the city. At the same time, some 1,800 finished apartments will be arriving in the suburbs or the Outside of Central Region. This is a significant decline from the 10,000 units finished in these regions earlier this year. It is anticipated that rents in these locations would also increase because to the reduced availability.

While rents will likely rise, analysts predict a slower pace of growth this year—between 12% and 14%—and 2% to 5% in 2019. This is down from last year’s 29.7 percent gain.

The number of HDB flats achieving their five-year minimum occupancy period (MOP) is projected to reduce from 15,748 units this year to 13,093 units next year and 7,454 units in 2025, indicating a further decrease in the stock for rental HDB flats.

The supply of public flats would be further reduced as high ABSD rates discourage homeowners with multiple properties from renting out their units. In terms of demand, if rents moderate next year, some local tenants may choose to move to the private market, while others may reduce their occupancy. Public rental apartments may see an increase in demand from foreigners if the employment economy shows signs of improvement next year.

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