Private rents remained stable in the last quarter of 2024, following a slight increase in the previous quarter. In contrast, the HDB rental market experienced a drop in demand due to rising prices and competition from the private market.

PRIVATE RENTAL MARKET

In the last quarter of 2024, private rents remained stable, with a slight increase in rents for non-landed properties. According to the quarterly data released by the Urban Redevelopment Authority (URA), private rents remained unchanged in Q4 2024, after increasing by 0.8 per cent in the previous quarter (Chart 1). For the whole of 2024, rental prices dipped 1.9 per cent, a reversal from the 8.7 per cent increase in 2023. This marks the first annual rent decline since 2020.

Condo rents in the prime areas or Core Central Region (CCR) and the city fringe or Rest of Central Region saw marginal quarter-on-quarter (q-o-q) gains of 0.9 per cent and 0.3 per cent respectively in Q4 2024, while condo rents in the suburban area or Outside of Central Region (OCR) decreased by 0.8 per cent q-o-q (Chart 2).

In 2025, positive rental growth is expected across all market segments. This could be driven by demand outstripping supply as there will be 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.

The overall rental volume decreased from 26,019 units in Q3 2024 to 19,451 units in Q4 2024. This could be due to lower demand, as many potential tenants may have been travelling during the year-end period. In contrast, the overall occupancy rate increased to 93.4 per cent in Q4 2024 (Chart 4).

Nonetheless, rental volumes for the entire year of 2024 were higher than those in 2023. Based on URA Realis data,  rental volume rose 4.7 per cent from 82,268 units in 2023 to 86,127 units in 2024 (Chart 3). The increase in annual leases can be attributed to more tenants returning to the private rental market last year, as prices appeared to appeared to have stabilized at slightly lower levels compared to 2023.

This year, there will be fewer private residential units completed, which may lead to a decrease in the number of new rental units entering the market. In 2024, a total of 8,460 private homes (excluding executive condominiums) were completed. However, in 2025, there will be a 30.9 percent decrease, with only 5,846 units expected to be completed. As a result, the total rental volume may drop to between 78,000 and 82,000 units for the entire year of 2025.

Private rents may continue to recover in 2025, with a projected increase of 2 to 4 per cent (Table 1). The rent recovery will be driven by improving macroeconomic conditions and employment growth, and less supply of completed private homes. 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 likely 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 private rental market. 

Nevertheless, we may continue to see slight upward pressure on HDB rents next year due to the limited supply of MOP flats entering the market. In 2025, an estimated 6,973 flats will reach their Minimum Occupation Period (MOP), 41.7 per cent lower than the 11,952 units that achieved MOP in 2024. For 2025, HDB rents are projected to grow at a similar pace as last year, at around 2 to 4 per cent ( Table 2). Leasing volumes may remain stable at 36,500 to 38,000 units.