SINGAPORE (EDGEPROP) - According to Savills Research, private residential rents will likely soften in 2H2023, despite seeing a  7.2% q-o-q increase in 1Q2023 based on URA data.

Notwithstanding the growth in private residential rents, the consultancy points to a slowing down in the leasing market, with URA figures showing private rental transactions fell 11.7% y-o-y during the first quarter, while HDB rental applications declined 5.2% y-o-y. “[The figures suggest] that demand is falling more out of economic-driven factors than high rents pushing foreign demand away from Singapore,” Savills states in a research report. (Find HDB flats for rent or sale with our Singapore HDB directory)

The fall in private housing leasing volume marks a second consecutive quarter of decline. It is also the lowest first-quarter volume recorded in the last six years.

In addition, rents of high-end non-landed residential properties tracked by Savills rose 4.7% q-o-q to $6.11 psf in 1Q2023, which the firm notes is a slower pace of growth compared to the three previous quarters. Savills further highlights that since mid-February, there have been “pockets of increasing slack in rental demand”, particularly for properties with a monthly rental amount of less than $10,000.

Looking forward, the consultancy expects rents to soften as the supply of new homes increases. About 17,600 private new homes are expected to complete this year, versus the 9,000 units in 2022. On the demand side, economic challenges facing tech and other companies may also stem the demand for rental properties from foreign talent.

“With more private residential project completions expected throughout the year, the rental pressure is expected to ease, and this should give both locals and expatriates greater ease of mind with regard to their accommodation plans here,” remarks Marcus Loo, CEO of Savills Singapore.

Meanwhile, Alan Cheong, head of research and consultancy at Savills Singapore, says the firm is maintaining its rental growth forecast for 2023 at 5% to 10% for non-landed private property in the mid-tier and mass market segments. For luxury apartments, Savills predicts rents may rise 10% to 15% this year. “This is driven by some foreign high-net-worth individuals who, because of the new 60% Additional Buyer’s Stamp Duty (ABSD) levy, may decide to rent while waiting for their permanent residency or Singapore citizenship,” he adds.