The private residential rental market has bottomed out after a prolonged decline and posted a modest recovery in the third quarter of 2024. The rental price recovery is anticipated to continue into 2025. HDB rental prices are expected to experience modest growth in 2025 on constrained supply. 

The rental price recovery is anticipated to continue into 2025, with a projected increase of 2 to 4 per cent (Chart 1, Table 1). The rent recovery will be driven by improving macroeconomic conditions and employment growth, and a constrained rental inventory. Based on the latest World Economic Outlook report by the International Monetary Fund (IMF), global growth is expected to remain stable in 2025, and business sentiment will experience an upturn as business costs are projected to decrease due to the prevailing lower interest rates and brightening economy. These factors will boost expat hiring, which will, in turn, benefit the rental market. 

According to estimations from URA, the number of private residential home completions is expected to decline further to approximately 5,348 units in 2025 from an estimated 9,103 units in 2024 and 19,968 units in 2023 (Chart 2). In 2025, positive rental growth is expected across all market segments, driven by a substantial reduction in projected completions compared to previous years. In particular, the suburban and city fringe areas are expected to witness more accelerated rent increases, as the decline in supply within these regions will be more significant. 

For instance, approximately 2,010 suburban private properties in OCR, excluding executive condominiums (EC), are set to attain their Temporary Occupation Permit (TOP) in 2025, which represents a striking decline of 68.8 per cent compared to the past 10-year average of 6,444 units from 2015 to 2024, further contributing to the tightening of supply. Similarly in the city fringe, 1,544 homes will be completed in 2025, 59.1 per cent below the past 10-year average of 3,777 units. For the prime CCR, 1,794 units will be completed, which is quite consistent with the past 10-year average of 1,907 units.  

Conversely, the disparity in rental prices between private homes in suburban areas and larger flats has been closing. This trend has encouraged many tenants to shift their focus towards leasing condominiums. For example, the median rent for non-landed private homes in the suburban OCR dipped to S$3,700 per month in October 2024, which is only S$200 more than the S$3,500 rental cost for a spacious five-room flat or larger during the same period. This relatively small difference in rental price makes leasing a condominium an enticing option for a growing number of tenants, especially those seeking privacy with appealing facilities.

The rent gap between private homes and HDB flats may stabilise next year. In 2025, there will be a significant decrease in the supply of completed private homes in the suburban OCR. On the other hand, five-room and bigger flats obtaining MOP are also projected to decline. Therefore, the net impact may see little change in the rent gap between the two housing types.  Nonetheless, some tenants may still shift from public housing to private homes if they can afford it.