HDB rental market to sustain growth momentum; private condo rents may face more headwinds in H2 2024

Mar 27, 2024

GOOD times may continue for landlords of Housing and Development Board (HDB) flats, but not those of private homes.

According to figures from SRX and 99.co released earlier this month, the rental price index for the non-landed private housing market fell in February, due to a supply glut last year. The index declined 1 per cent from January to mark a net negative growth for 13 straight months.

However, the rental price index for HDB flats grew 1 per cent to reach an all-time high of 137.5 last month. Rental volume for both HDB and condo slipped in February, mainly due to the Chinese New Year festivities.

Market analysts expect the HDB market to sustain its growth momentum, while the private rental market may take longer to recover. ERA forecasts private home rents to fall 5 per cent in 2024, but HDB flat rents to rise 10 per cent this year.


The recent increase in the completion of new private homes and affordability issues are behind the subdued outlook for private home rentals.

Mohan Sandrasegeran, head of research and data analytics at Singapore Realtors Inc, said: “In 2023, a record-breaking 19,968 private residential units (excluding executive condominiums or ECs) were completed. This number significantly surpasses the 9,526 units finished in 2022, and represents the highest annual completion rate for private residential properties (excluding ECs) since 2016, which witnessed the completion of 20,803 units.”

Still, completion of new private homes is slowing down.

OrangeTee Group’s chief researcher and strategist Christine Sun said: “For 2024, the private housing market supply is expected to drop, with nearly 10,000 new homes slated for completion. The completions will drop further to 5,500 units in 2025.”

She said competition for tenants may ease from the second half of this year or next year, and rents may bottom out this year.

For HDB flats, an estimated 11,952 units will reach the five-year minimum occupation period (MOP) mark this year, 23.1 per cent lower than 2023, said Lee Sze Teck, senior director of data analytics at Huttons Asia.


Lee expects rents of HDB flats could rise by up to 8 per cent this year with lower new supply, and tenants looking for affordable options as private housing rents are still high for some.

Wong Siew Ying, head of research and content at PropNex Realty, said tenants who are on a tighter budget tend to comprise a mix of foreigners (such as Employment Pass holders) and locals, including families waiting for their Build-To-Order or new homes to be completed, or former private home owners serving out the 15-month wait-out period.

She noted that the sharper increase in private home rentals in previous years could have channelled some leasing demand to the more affordable HDB flat rental market.

According to estimates provided by Huttons Asia, about 90 per cent of the foreign workforce in Singapore do not receive any housing allowance from their employers, said Lee.

When these tenants are looking for places, “they will look for accommodation which costs less than 30 per cent to not more than 50 per cent of their monthly income”, he added.

OrangeTee’s Sun observed that the stronger demand for HDB flats could also be due to some rightsizing from tenants in mid-sized condos to bigger HDB flats.

There are also some tenants who prefer to rent newer, centrally located flats which have just reached their MOP, as they prioritise convenience and affordability over condo facilities, she added.

Data from ERA showed that the rental difference for a comparable 1,000 square foot (sq ft) HDB flat versus a condo unit could vary from 6.3 per cent to 29.4 per cent within the same location.

ERA Singapore’s key executive officer Eugene Lim said HDB towns with more new private projects completions are seeing smaller price gaps between HDB and condo rentals.

“In March 2023, the (rental) gap for a similar sized three-bedroom unit at Alps Residences condo (S$5,000) and a four-room HDB flat in Tampines West (S$3,700) was S$1,300. The gap today is S$1,000,” he said.

In terms of configurations, four-room HDB flats are the most popular flat type among tenants, while two-bedroom units are preferred for private condos.

Lease terms

The usual lease term to rent a unit, whether HDB or private, is typically two years, said Huttons’ Lee, and most units are generally furnished.

However, PropNex’s senior associate director Anthea Yeo said most tenants are now seeking one-year lease instead, with a view that rentals may ease in the future and they could renew or lease another property at a more favourable rental rate.

“Landlords, on the other hand, prefer that tenants sign a two-year lease, so as to have some peace of mind. That said, we have also seen cases where tenants are looking at leasing for six months. Depending on the landlord’s mindset and how long the unit has been left vacant, some landlords are flexible and willing to accept a six-month lease,” she said.

“By and large, we are not seeing landlords throwing in additional freebies or going all out to refurbish their unit to attract tenants. Providing these extras may help to secure a tenant more promptly, but the add-ons may not necessarily help to fetch better rentals, as rental prices are largely influenced by recent transactions in the area,” she added.

PropNex’s Wong added that competition to rent out newly completed private condo projects may be stiff, but it all boils down to its location, the competing supply in the vicinity and within the development.

She noted that mega projects tend to enjoy a good market share of rental activity. For example, at 2,203-unit Treasure at Tampines, there were 62 rental contracts accounting for a third of rental activity in the entire Tampines planning area.

At Parc Clematis with 1,468 units, PropNex noted that the project had 49 rental contracts, accounting for 30 per cent of the rental activity in the Clementi planning area.

Larger units of between 900 and 1,000 sq ft in mega projects also tend to fetch a premium over the monthly average rents in their planning areas, Wong said.

OrangeTee’s Sun noted that slightly older units are still in demand as these units are bigger than the newly completed ones.

“However, for the much older units that are not well kept, they may take longer to lease out. These may be put up for more than six months with limited response.”

ERA’s Lim also shared on the disparity in rents between new and older homes. A three-bedroom unit at Amber Skye (completed in 2017) was rented out last month for S$5,800, while a similar-size unit at Coastline Residences (completed in 2023) could fetch S$6,800 a month, highlighting tenants’ preference for newer developments.

While some owners may face challenges in leasing out their units, PropNex’s Yeo said landlords generally have expended some effort in purchasing their investment properties, and hence are not inclined to sell their properties.

“Some owners have bought the property when the Additional Buyer’s Stamp Duty was lower or not introduced yet, so owners may not be willing to part so readily with their investment properties,” she said.