Singapore housing supply to drop in 2024

Only around 10,000 new homes are expected to be completed.

According to a report from OrangeTee Research, Singapore’s private rental market entered a clear slowdown in the second half of 2023, which is particularly evident in the luxury market. 

Perhaps rent prices have risen too significantly over the past two years, driven by a lack of housing supply and strong local demand during the pandemic. 

Here’s more from OrangeTee:

However, the supply ramp-up of around 28,600 new private residential properties (excluding executive condominiums or EC) completed from 2022 to 2023 has taken a toll on the rental market. This was accompanied by domestic demand contracting sharply as many locals exited the leasing market after moving into their new homes. 

Housing supply is expected to drop in 2024, with nearly 10,000 new homes slated for completion. Most of these new homes will be located in the prime areas or the Core Central Region (CCR) at around 4,100 units. Slightly over 3,900 homes will be completed in the city fringe or Rest of Central Region (RCR). 

Landlords in the city fringe areas will face steeper competition for tenants as almost 16,000 new homes will have been completed from 2022 to 2024. Similarly, for the luxury segment, the total new completions in CCR will be around 7,700 over the same period. 

However, we anticipate that more foreigners may rent private homes in prime locations since they incur a 60 per cent Additional Buyer’s Stamp Duty (ABSD) should they purchase a residential property. The increased foreign demand may mitigate a sharp rental correction in the CCR. Moreover, supply for CCR homes is set to fall more steeply after 2024 compared to RCR and OCR.

Rental prices in the suburbs or Outside of Central Region (OCR) may rise further, supported by less home supply. The number of completions in OCR will fall substantially from around 10,000 units in 2023 to approximately 1,800 units in 2024. 

Overall, it is anticipated that the downward pressure on rental prices may continue, and the rental price growth is expected to slow from the 29.7 per cent increase in 2022 to around 12 to 14 per cent in 2023 and 2 to 5 per cent in 2024. As domestic demand for rental properties continues to shrink, overall rental transactions may fall below its 10-year average of 81,474 units to around 75,000 to 80,000 units in 2023 and about 70,000 to 75,000 units in 2024.