PropertyGuru has found that since the last quarter in 2023, private residential landlords are asking lower rents as demand for rental properties is waning and supply is increasing.

The study, released in late March, found that asking rental rates – as determined by the listings of PropertyGuru portal – continued to decline in the final three months 2023. In October and November, asking rents were corrected. This led to lower transacted rental rates in December.

After two years of substantial growth, both for asking prices and transacted values. Rents in non-landed private properties grew 38.8 percent between Q4 2010 and Q4 2013. This is based on Urban Redevelopment Authority’s Rental Index.

PropertyGuru grew its portal’s median asking rent by 27.3% from January 2022 until December 2023. The median rent for transacted transactions, on the contrary, rose 35.3%.

The rent decline is due to the easing in rental demands and a boom in supply that has occurred in the past two years.

Based on PropertyGuru’s Engagement Data – a proxy of home demand measured by visits to the Portal, time on the Listing, and outreach with agents — rental demand fell by more than 70% from July 2022’s peak. While the number has been rising since January of 2023 (up 62.9% for the year), the rental demand is down by nearly 70 per cent.

This indicates that landlords, who had expected tenants to be paying higher rents during the second half in 2023, may have been faced with longer waiting periods in leasing their property. Or they might have finally done so for lower prices.

The gap between asking prices and rents transacted began to narrow in 2023.

The narrowing difference indicates a shift within the rental industry, as landlords are now less likely to increase their asking rents. This trend may have been influenced because rental properties were on the market for a longer period of time, leading landlords adjust their expectations according to market conditions and tenants affordability.

Singapore’s decline has been resisted by certain areas.

Find out more: Lentor Hills Residences

In District 9 in Orchard (River Valley), rental listings maintained the highest rates of visits, with high renter interest. Market friction was also increasing.

This suggests there is a greater demand for rental property than what the market can currently supply in the region, possibly signaling a landlord’s market with an increased level of competition among renters.

In March 2010, the median rent for potential tenants in district 9 was S$6,000. The rent for the 25th-percentile monthly was S$4,000 while the 75th-percentile monthly rent was S$8,800.

99.co reported that, for example, the average monthly rental of a 2 bedder at The Sail @ Marina Bay in January was S$6,656. The project is a favorite among tenants from the Core Central Region. It was an increase of 2.4% over January 2023 when it was S$6,499.

Stirling Residences was a well-known project in the Rest of Central Region. Its rent in January of 2024 was S$4,620. This is down 7.2% on the S$4,979 of the previous calendar year. Parc Riviera’s Outside Central Region saw an average two-bedder rent of S$3,740 per month in January 2020, a drop of 8.2 per cent compared to January 2023.

The rental sector is about to reach a tipping point. Due to market uncertainty it would be difficult, if not impossible, to predict how much the rental market will correct.

According to SRX’s and 99.co’s latest estimates released Thursday, condo rents rose 0.3 per cent after seven months of declining rates.

Even if rents drop, they may not be very significant, considering the dramatic increase in rents in the past 2 years.

The location and characteristics of the project will also affect the correction in rents.

Rents will therefore fall if older units are sold or if they have less desirable features or location. Rents may remain steady for newer projects and those in high-demand locations such as the freehold apartment Klimt Cairnhill at District 9.

Rents of three-bedders, and other smaller units have begun to slow down. This could be a sign of an increased number of inquiries, or that landlords are resisting further rent reductions. In the meantime, because of a limited supply, bigger bedroom types continue to be popular.