As demand for residential property moderates, and as more homes are built to increase supply, rents are expected to continue to fall.

PropertyGuru, an online property portal, released a market report on Thursday (16 Nov) that showed rental demand had fallen 10.4% quarter-on-quarter in Q3.

Overall rental supply, based on all the rental listings available on PropertyGuru’s portal, rose by 11.3 percent in Q3.

The overall rents were down 2.5 percent from the second quarter, marking the second consecutive quarter of decline.

Rents are now less expensive because the pandemic-induced pressure on rental prices has subsided. Workers from Malaysia do not need to rent temporary accommodation after the land border was reopened. The number of households in Malaysia moving into new homes has increased as more homes are being completed.

The largest decline in rents was seen in the segment of landed private properties, where the asking rents fell 7.6 percent in Q3 compared to the second quarter. Data from PropertyGuru showed that asking rents for non landed properties decreased by 4 percent.

The Eunos/Paya Lebar area is the most relaxed in terms of asking rents, followed closely by the Orchard Road region.

Data from the portal showed that median asking rents for the Eunos/Payar-Lebar and Orchard areas fell by 6 percent in October compared to previous months.

The landlords of these traditionally desirable locations are adapting to the shift in demand. This has seen a substantial decrease in comparison with last year.

The latest available data from the government shows that the overall rents for private residential properties increased by only 0.8 percent in Q3, compared to a 2.8% increase the quarter before.

Rents of non-landed property increased by 0.2 percent, down from 2.3 percent in the previous quarter. The rental of landed property increased by 4.4 percent in Q3, which is a moderated increase from the 6.7% in Q2.

Lentor Mansion Condo Lentor Gardens

Rental demand, as measured by PropertyGuru in the public housing segment fell 14.7% quarter-on-quarter in Q3, while rental availability rose 7.8%. However, the asking rents of HDB flats increased by 3.5 percent over the same period.

Tenants who usually rent private properties may have explored more affordable options on the HDB rental markets due to rising rents.

Renters of HDB flats or single rooms are less likely to be under financial pressure to reduce their rent. It could be because they have smaller loans or are less affected by interest rate increases than private home owners.

The market for non-landed property appears to be at its peak. The asking rents in Q3 were 4 percent lower than the previous quarter.

The increase in rental housing is due to the influx of private homes that have been built over the past few years.

Several projects were granted temporary occupation permits in Q2. The 667-unit The Woodleigh Residences as well as the 1,052-unit Affinity At Serangoon and the 1,472-unit Riverfront Residences are among the projects that received temporary occupation permits in Q2. There is enough supply to meet the demand, especially with the completions of the first quarter.

In Q3, around 9,000 private residential units (excluding executive condos) were also completed – the most quarterly completions in Q2 2016! The number of units completed in the first quarter of 2023 is 17,199. This is more than three-times the amount of the same period of 2022.

This year, the supply of private homes is expected to reach a record high of 20,400 units.

In 2024, another 8,959 units will be completed. Rents will soften with the increase in supply and as domestic demand decreases.