Singapore residential rental growth rates finally tapering off

The rental index grew 2.3% in Q2, a much slower rate vs Q1’s 6.2%

Despite declining leasing volume, the URA’s overall rental index for non-landed private residential properties in Singapore continued its upward trajectory, rising 2.3% in Q2/2023 over the previous quarter. In Q1/2023, the QoQ increase was 6.2%. 

By location, Savills said in a report that rents of non-landed homes in OCR recorded a slightly higher growth of 2.9% QoQ in the quarter, followed by CCR and RCR both up by 2.0% QoQ.

Here’s more from Savills:

The rate at which rents were rising is finally starting to slow across both property type and market segment. Economic uncertainty and inflation, which is shrinking the budgets of tenants, are prompting many to downgrade to more affordable locations, smaller units or share an apartment with others. 

In view of lower demand, increasing supply and a longer time to let out a unit, landlords have little choice but to accept rents at levels which are less than what they had initially expected. Consequently, with a further release of new supply, there is optimism that we may see a return toward pre-pandemic market behaviour norms and that the astronomical rental gains of the past two years will be behind us.

In a similar vein, the average monthly rent of high-end non-landed residential projects in Savills’ basket continued to rise by 1.5% QoQ to S$6.19 per sq ft (psf) in Q2/2023, slower than the 4.7% growth in the previous quarter. Over the first half of 2023, the rents have only increased by an accumulated 6.2%, in sharp contrast to the 35.9% growth for the whole of 2022.