Analysis: Will HDB rental fees decrease in 2024?

In our recent flash report of rental trends in Singapore's market, Luqman Hakim, 99.co's Chief Data & Analytics Officer, noted a "continuing downward trend in condo rental prices while HDB rentals maintained an upward trajectory".

This pattern persisted throughout most of the past year, with occasional fluctuations.

Given this backdrop, a reader recently posed a question in one of our articles about whether rental fees would decrease in 2024.

Although the inquiry did not specify between condo and HDB rental fees, we'll focus on HDB rentals since they've been on the rise.

Let's take a look at this query and examine the prospects for HDB rental fees in the upcoming year.

Q4 2023 HDB rental trends for three, four, and five-room HDB

In the fourth quarter of 2023, the rental trends for various types of HDB flats indicated a mixed picture.

For three-room HDB flats, the estimated rental prices ranged from $2,200 to $3,000 per month. Affordable options were available in heartland areas like Bukit Panjang, Jurong East, Woodlands, Hougang, Jurong West, and Yishun.

Conversely, rentals in the city fringe or Central area commanded higher prices, starting from at least $2,700 to $3,000.

For four-room HDB flats, rental prices ranged from $3,000 to $4,050 per month. While most neighbourhoods experienced a slight median rental price decrease, city fringe areas like Geylang and Marine Parade saw double-digit growth.

Affordable options were found in Bukit Panjang, Woodlands, Yishun, Choa Chu Kang, and Sembawang, with higher prices closer to the city centre.

Similarly, five-room HDB flat rentals in Q4 2023 ranged from $3,200 to $4,300 per month.

Cheaper rentals were available in areas like Bukit Panjang, Sembawang, Serangoon, Choa Chu Kang, and Woodlands, with higher prices in city-fringe neighbourhoods such as Bukit Merah or Queenstown.

So, what about HDB rental fees in 2024?

Stable rents for HDB tenants

Industry experts anticipate a stabilisation of HDB rental fees in 2024, providing relief for tenants amidst a slight uptick observed in December 2023.

This projection comes after a surge in rental prices in 2022, attributed to a decline in the supply of flats reaching the Minimum Occupation Period (MOP).

Despite expectations of a tighter housing market, analysts suggest a modest increase of one to three per cent in rental prices.

If you're wondering about a specific timeline for when you can see HDB rental fees dropping, you might want to keep an eye on the end of the year.

This is because more completed units are expected to become available for lease, potentially impacting rental rates.

Factors moderating rent prices

Several factors contribute to the moderation of rental prices. These include an increase in completed BTO flats, BTO launches, private properties receiving Temporary Occupation Permit (TOP), and HDB flats fulfilling MOP.

Additionally, a temporary increase in the number of tenants allowed in larger HDB flats to eight people also aims to cool the home leasing market.

A closer look at the supply and demand side of things

The decline in the supply of flats reaching the minimum occupation period has led to an increase in demand for HDB flats.

However, the projected decrease in the number of flats reaching the five-year MOP in 2024 is expected to contribute to rental price stabilisation.

How would that work? Shouldn't it be the other way around?

Well, with an expected decrease in rental volume from 36,000 to 38,000 units in 2023 to around 33,000 to 35,000 units in 2024, the rental market is likely to become more competitive for landlords.

This could potentially result in more favourable rental terms for tenants, allowing them to negotiate for lower rents.

Potential impact of macroeconomic factors

The rental market's performance may also be influenced by broader economic factors. If the macro economy outperforms expectations, more expatriates may return to Singapore, boosting the rental market further.

Until then, what can renters do?

For individuals facing financial constraints when renting an HDB flat, the HDB Public Rental Scheme provides an option.

Eligibility criteria include being a Singaporean citizen, meeting age requirements, and demonstrating a gross household income of $1,500 per month or less.

Successful applicants under this scheme may pay a monthly rent ranging from as low as $26 to $275 based on their household income.

ALSO READ: Buying an HDB BTO flat in Singapore: A step-by-step guide (2024)

This article was first published in 99.co.