The private residential leasing market may continue to remain weak, but there are signs that it could stabilise this year, says Nicholas Mak, executive director and head of research & consultancy of ZACD Group. The private residential rental index fell 0.9% q-o-q in 4Q2017, after remaining unchanged in the previous quarter. For the whole of 2017, rentals of private residential properties fell 1.9% y-o-y, compared with a decline of 4% in 2016. “Even though the overall rental index continued to drop in 4Q2017, the rate of decline on a yearly basis has decelerated,” he observes.

The recovery in the residential leasing market is due to a decline in the vacancy rate from 8.4% in 2016 to 7.8% in 2017. This was mainly because of a decline in the supply of newly completed units — which hit a four-year low of 16,449 units — compared with a new takeup level of 16,852 units in 2017, according to Ong Teck Hui, JLL national director of research. The number of newly completed units last year was also more than 20% lower than that in 2016.

About 10,000 private housing units are expected to be completed in 2018, notes ZACD Group’s Mak. “This is lower than the three-year average absorption rate of about 17,000 units a year from 2015 to 2017,” he adds. Therefore, he reckons the vacancy rate could “break below 7%” by year-end.

JLL’s Ong agrees. “In the face of more favourable economic and business conditions, vacancy rates are likely to decline, raising the prospects of rents stabilising,” he says.

As the Singapore economy picks up pace in 2018, more foreign labour, including working professionals, will be hired, says Christine Li, director and head of research at Cushman & Wakefield. “Coupled with the removal of the older en bloc developments, occupancy rates for private properties could start to improve.” Nevertheless, non-landed rents in the Outside Central Region could still come under pressure, given that 50% of incoming supply is expected to be in OCR from 2018 to 2022.