Rental market narrowed demand-supply imbalance, rent fallen
In the Q3, excluding executive units, around 9,000 private residences were also finished – this is the highest quarterly completion since Q2 2016. This brings the total number of completed residential units for the first three-quarters of 2023 to 17,199. That’s more than triple the figure from the same quarter in 2022.
The completion of approximately 20,400 private homes this year will be the highest annual supply since 2017.
It is expected that 8,959 more units will be completed in 2024. The asking rent should fall as the demand for housing decreases and further supply increases.
This led to an overall decline in asking rents of 2.5 per cent compared to Q2, which marks the second consecutive contraction quarter.
The rental pressures caused by the pandemic have now subsided. After the land borders were reopened to Malaysian workers, they no longer needed temporary rental accommodations. In addition to the completion of more homes, local residents are also moving into these new homes.
Rent increases in non-landed real estate decreased from 2.3% to 0.2% in the third quarter. Rentals of land properties rose by 4.4 % in Q3, down from 6.7 % in Q2.
PropertyGuru measured that rental demand in public housing dropped 14.7% from Q3 to Q3, while rental supplies rose 7.8%. But, HDB flats were rented at higher rates than before.
As rents have risen, tenants that usually rented private properties could be exploring more affordable HDB options.
Property type-wise, the largest drop was in the landed property segment. Asking rents dropped 7.6% in Q3 over the second quarter. PropertyGuru’s data shows that rents on non-landed property fell by 4%.
Orchard Road and Eunos/Paya Lebar are the two areas that have seen a notable drop in rents.
According to portal data, the median asking rental prices in the Eunos/PayarLebar/Orchard regions fell by around 6 per cent from the previous month.
There is a noticeable decrease in demand for these traditionally sought after locations.
The latest government data indicates that overall transacted residential rents rose only by 0.8% in Q3, down from a previous increase of 2.8%.
Renters in HDB flats and single rooms will also be less likely to experience financial pressures that force them to reduce rents. This may be due to the smaller loan amount or because they are not as affected by the rising interest rates compared to private property owners.
The non-landed market for private property has reached a peak. In Q3, asking rents were down 4 percent from the previous period.
In previous quarters there was an increase in private housing, increasing the supply of homes for rent.
Several projects received their temporary occupancy permits in Q2. The Woodleigh Residences with 667 units, Affinity Serangoon with 1,052 units, and Riverfront Residences with 1,472 units are all included. The first quarter completions and the current supply will satisfy demand.
The rents of residential property are expected further to decrease, even though they already decreased in the third quarter due to a moderated demand and an increase in supply.
PropertyGuru published a report on the market on Thursday (Nov. 16), which showed that in Q3, rental demand, as measured by the number of inquiries on all rental listings listed on its website, fell 10.4% from quarter to quarter.
The overall rental market – which is based upon the number of rental listings that are available on PropertyGuru – increased by 11,3 per cent during Q3.