The gap in rent between Housing Board apartments and condos is now much smaller. Private unit rents have fallen over the past six months. HDB rents, however, have remained stable and have even reached new heights during this period. This has led to a discrepancy between the performance of housing types.

If this trend continues, renting a house may be more appealing than renting HDB apartments, especially if the tenants are willing compromise their space for privacy.

Tenants could change their preferences and priorities soon. Landlords or property owners must be alert to changes in the market and adapt their strategies accordingly. This can help to mitigate the risk that prolonged vacancy times will occur.

Private rental markets have slowed down rapidly. This has led to more landlords accepting lower rents so that their units are not vacant. The situation is a stark contrast to two years ago, when an apartment would receive more than twenty viewings per day and could be leased with a single week. Now it can take anywhere from two to three months to rent out a home. Some older or badly maintained units may even remain vacant for six months.

Over 29,000 private homes were completed between 2022 and 2023, resulting in a lower rent. An abrupt contraction in the domestic market further exacerbated the situation. Many locals left the leasing market once they moved into their homes. A drop in the demand of expatriates has also made the challenges on the market more apparent, as multinational corporations and tech firms have been restructuring their businesses over the past 12 months.

The Urban Redevelopment Authority data shows that monthly median condo rents have been declining since the third quarter 2023. They went from $4.550 per month to $4.500 during the fourth quarter 2023 and $4.300 for the first two weeks of 2024.

The largest decline in rents of private condos was seen in the central core region (CCR) between the third and first months of 2024. This area fell by 5.6 percent. It was followed by suburbs (outside of central area, OCR), with a 5 percent decline, and city fringes (rest of central area, RCR), with a 3.3 percent drop.

In some districts, the median rent of condos fell steeper than in others. District 5 (Pasir panjang, Hong Leong Garden & Clementi New Town), saw a significant fall of 10.9%, from $4.600 during the third quarter 2023 to only $4.100 in January-February 2024. District 13’s (Macpherson & Braddell) median rent dropped by 9.1 %, while Districts 18, Tampines & Pasir Ris, and District 4, Telok Blangah / Harbourfront, experienced a 7.7 % drop.

District 10 (Ardmore Bukit Tiah Holland Road Tanglin Bukit Timah) experienced the greatest drop, 6.9%, from 6,900 to $6425, during the same period.

HDB flats are a very different market than private rentals. According to SRX99.co’s latest estimates, HDB rentals are steadily rising and will reach a record high in February of 2024.

Median rents of three-room flats rose the most, by 12 percent, in the first two month of 2024 when compared with the same period the year before. According to HDB’s rental caveats data, four-room and executive flats saw a growth of 10%, five-room and two-room units saw a rise of 5%, while two-room units saw 4%.

In addition, two HDB units were rented at a monthly rate of over $7,000, while 43 HDB apartments have been leased to date for less than $6,000 each. In November 2023, a five room flat in Tanjong Pagar Plaza, central area, was rented for $7,600 per month. A five-room apartment in Geylang located at Pine Close was leased in September 2023 for $7400 per month.

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The HDB market continues to grow steadily. Rents in some areas have reached new records. This is largely due to the demand for HDB units and the limited number of flats available. HDB flats were chosen by many tenants because they are more affordable than private homes. This is due to the inflationary pressures on rents and tax increases.

Similarly, the number HDB flats which have completed their five-year Minimum Occupation Period (MOP) has decreased. This means that fewer of these units are now available for rental. MOP flats have decreased from 30,920 units in 2022 to only 15,549 units in 2023.

The difference in rent between HDB apartments and condos is decreasing. Rents may gradually recover as more tenants move to condos.

While the overall rents are at new highs, in 2024 there was a decline in the number of apartments leased with higher prices. This shows that HDB tenants are less willing to pay high HDB rents. They have likely found other options in the private sector.

For example, in the first 2 months of 2023 there were 157 units leased with a rent monthly of at least $4.500. However, in the same time period in 2024, only 114 flats were leased. In the same period, the number flats leased with a minimum monthly rent of $5,000 fell from 60 to only 21.

When comparing rental prices between HDB flats, and condos, the gap has closed. In the third-quarter of 2023 the median rent for HDB apartments was $3,100, while the median rent for private homes was $4,550. The gap between the median rent of HDB flats in 2024 and the median rent for private homes will shrink to around $1,200.

As rents for private flats become more affordable, some tenants might opt to move from larger apartments into smaller two- and three-bedroom condominiums in suburbs. Based on transactions during the first two months in 2024, the median rental price for a two bedroom condo in suburban OCR is about $3,600. This rate is comparable to that of a five room or executive apartment, which costs around $3,500-$3,600 per month.

The smaller units, which are 800 to 1,200 square feet in size, were available for rent at $4,000 and below between January 2024. Units of this type can be found at District 26 (Upper Thomson), District 17(Loyang, Changi), and District 28 (Seletar). They are also available in District 23 (Hillview Dairy Farm Bukit panjang Chua Chu Kang), District 27 (Yishun Sembawang), and District 25 (Seletar).

Tenant behaviour may change as the gap in rents between HDB and the private market narrows. Some tenants might return to private housing, while others could move from the city outskirts to prime areas.

HDB rents may experience some downward pressure from the impending market competition. The limited supply of MOPs, which are expected to drop to 11,952 by the end of the year, can prevent a major price correction.

Due to the relaxation of occupancy caps for these units, up to 8 unrelated people can live in a unit.