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THE private housing market saw more leasing activities during the third quarter, with leasing volume of private homes (excluding executive condominiums or ECs) climbing 24.4 per cent quarter-on-quarter (qoq) to 25,731 units.

This was due to seasonal factors such as the school year and corporate relocation cycles, as well as lease renewals and expiries, a report by Savills Singapore indicated on Wednesday (Nov 13).

Savills noted the number of private residential property rental contracts signed in Q3 2024 was 9.9 per cent higher than the 23,422 recorded in the same period in 2023.

In the landed housing segment, the number of rental contracts signed in Q3 surged by 46 per cent qoq to 1,610. The number of rental contracts inked for non-landed homes rose by 23.2 per cent qoq to 24,121 units, noted the consultancy firm.

By region, rental contracts of non-landed properties in the Rest of Central Region (RCR) had the highest quarterly growth where leasing transactions rose by 25.2 per cent. This was followed by the Core Central Region (CCR) at 23.5 per cent and the Outside Central Region (OCR) at 21.2 per cent.

Savills said the robust growth for lease volume was driven by more people upgrading their accommodation. “This was fuelled by more palatable rents and an ample supply of units from new completions,” the company said.

It also noted that one to two-bedroom units were in demand during the quarter, as rents have fallen from the four prior quarters, resulting in more people looking for smaller units instead of sharing a larger unit with others.

The average monthly rent for high-end non-landed residential projects tracked by Savills continued to decline by 0.9 per cent qoq in Q3. This decrease has been observed since the corresponding period a year ago and has resulted in a cumulative drop of 7.2 per cent from the peak in Q2 2023 to S$5.75 per square foot per month in Q3 2024.

The rents of non-landed homes in the prime CCR – a proxy for high-end and luxury homes – fell 1.6 per cent qoq, marking its fifth consecutive quarter of decrease, according to Urban Redevelopment Authority’s (URA) rental index for Q3.

Savills attributed the above decline to the global economic uncertainty and the relatively limited pool of expatriates with substantial housing allowances which restricts rental growth in the near term for this segment.

On the other hand, URA’s islandwide non-landed residential properties rental index rose 0.5 per cent in Q3 2024 after three consecutive quarters of decline, driven by strong rental performance in both the RCR and OCR, which posted 1.7 per cent and 2.2 per cent growth respectively.

Savills attributed the rental growth in these two segments to seasonal factors and a shift from public housing units to entry level condominiums, driven by “more supply and more reasonable asking rents”.

Alan Cheong, executive director of research and consultancy, said that the overhang in supply from the 19,968 private homes (excluding ECs) which were completed in 2023 have been largely taken up. He noted that there were fewer completed units in the first two quarters of this year, further helping to ease the oversupply situation.

Although rents have turned the corner, Cheong said that the upside will be capped by several factors – the climb back of up to 3,000 plus unit completions per quarter, the waning demand from Employment Pass holders to rent private homes and the relocation of companies’ shared services to other locations.

While companies continue to cut costs by reducing staff numbers, he noted that landlords are now paying higher property taxes. In addition, “the rising inflationary pressure is driving up conservancy charges, giving landlords another reason not to give in to low ball rental offers”.

Savills amended its forecast of a 5 per cent yearly decline in private home rentals to a 2.5 per cent year-on-year decline in 2024. For 2025, the consultancy firm expects rents to stay “sideways as businesses face headwinds and thus continue to watch their labour costs”.