Non-landed residential rents dip slightly in Q2 with market stabilising: Savills
RENTS for non-landed private homes dipped by a marginal 0.7 per cent in the second quarter of 2024, improving from the overall 1.8 per cent drop in Q1, a report from Savills Singapore showed on Thursday (Aug 1).
But while the rental market appears to have arrested its decline in the last few quarters, median private rents across all regions and unit sizes in Q2 were 5.3 per cent lower year on year, stripping out outliers.
Rents for one-to-three-bedroom units were down 6.2 per cent year on year in Q2. In Q1, they were 2 per cent lower compared with the year-ago period.
“Although rents are appearing to be pulling out of a dive, it is increasingly the norm that once a tenant vacates, the unit will take a month or two to be let out unless the landlord lowers the rent significantly,” said Alan Cheong, Savills executive director of research and consultancy. “By ‘significant’, it may mean asking for rents achieved in mid-2022.”
In a small handful of submarkets, rents rose in Q2 and reversed their previous decline. Rentals for three-bedroom units in District 1 (Boat Quay/Marina/Raffles Place) climbed 4.7 per cent after falling 5.6 per cent in Q1. Those in District 3 (Alexandra/Commonwealth) went up 1.6 per cent in Q2 after a 6.1 per cent in the quarter before, and District 4 three-bed apartments (in the Harbourfront and Telok Blangah precincts) rose 1.2 per cent after falling 3.5 per cent in Q1.
Average median rents for 3-bedroom units were flat in District 5 (Buona Vista/West Coast/Clementi) and District 13 (MacPherson/Potong Pasir), said Savills.
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Rents fell the most among one to three-bedroom units in District 2 (Chinatown/Tanjong Pagar), sliding 6.3 per cent, and in District 26 (Mandai/Upper Thomson), falling 5.2 per cent.
“We are expecting 9,600 units to be completed this year versus 19,376 new units that were completed last year. Though there is current stock still in the market, rents are stabilising. This is likely due to the stock slowly being absorbed,” said George Tan, managing director of Livethere Residential, the digital marketing platform of Savills Singapore.
Monthly rents for one to three-bedroom units in all market segments continued to fall in Q2, said Savills. Rents in the Core Central Region (CCR) dropped the most – by 2 per cent, while rents in the Rest of Central Region (RCR) dipped 0.4 per cent. Outside Central Region (OCR) rents fell 1.6 per cent.
Compared to the year-ago period, rents for one to three-bedroom units in the CCR fell 7.9 per cent, while rents in the city-fringe RCR and suburban OCR were roughly 5.5 per cent lower.
Among three-bedroom units – the most popular leased size – rents were highest in District 1 (S$8,900), District 4 (S$8,300) and District 9 (S$7,500). On a yearly basis, however, overall rents for such prime locations declined 6.2 per cent in Q2, compared with 2 per cent last quarter.
Cheong suggested it may be better for landlords to remain flexible in lease negotiations during tenancy renewals. “This is because higher annual values for property taxes is a bigger cash drain for a unit that remains untenanted.”
The fall in private home rents may also start to draw tenants away from the public housing rental market, he said.
Government data showed the Urban Redevelopment Authority’s overall rental index dipping 0.8 per cent in Q2, after easing 1.9 per cent in Q1 and 2.1 per cent in the last quarter of 2023. For the first half of 2024, overall rentals dropped 2.7 per cent, compared with the 8.7 per cent increase in 2023 and 29.7 per cent increase in 2022.
Figures from Housing and Development Board (HDB) in Q2 showed that median rents for a four-room flat can range from S$3,000 to S$4,400 per month across all towns. HDB rents in June were up 0.5 per cent from the same period a month earlier and rose 5.5 per cent year on year, SRX and 99.co’s data showed.
For 2024, Savills said, private residential rents are expected to fall 5 per cent year on year.
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