URA data revealed that the rental price index has increased to 111.3 in Q3 2021, its highest since Q1 2015; private property which cost $2,500 and $4,000 in monthly rental fees see high demand.
Singapore saw home rents increase to a six-year high, with analysts expecting further hikes as demand outweighs supply, reported Bloomberg.
The hike has added to the rising costs facing residents, particularly expatriates.
Much of the gains in rent is attributed to the COVID-19 pandemic – a shortage of migrant workers contributed to construction delays, which forced people to lease as they wait for the completion of their apartments. Younger Singaporeans looking for space to work remotely have also been moving out of their family home, while homeowners returning from their stints overseas are taking back their apartments, reducing the rental stock.
“At the beginning of the pandemic, people expected a high probability of deflation setting in,” said Savills Executive Director of Research Alan Cheong as quoted by Bloomberg.
“But who would have anticipated the opposite, an endemic inflation that’s now the talk of the town.”
Notably, the private home rental price index climbed to its highest level in six years.
Cheong noted that apartments with a monthly rent of between $2,500 and $4,000 may face the greatest pressure due to high demand. In fact, rents for some units have increased by 10% to 15% this year alone.
The Monetary Authority of Singapore has also sounded a note of caution, pointing that home rentals rose 7.1% during the first nine months of this year.
And while supply remains somewhat adequate, “further declines in the vacancy rate could trigger a sharper increase in rentals”, said the central bank in its Financial Stability Review this month.
Urban Redevelopment Authority (URA) data showed that the rental price index jumped to 111.3 in Q3 2021, its highest since the first quarter of 2015.
In its cost of living rankings for 2021, the Economist Intelligence Unit has listed Singapore and Paris as the second most expensive city in the world. The city-state is also one of the priciest property markets.
A surge in home sales and prices prompted authorities to introduce a new round of property cooling measures earlier in the month, with the curbs mainly targeted at acquisitions by investors and foreigners.
Unlike other global financial centres such as London and New York, residents within the city-state do not have the choice of moving to the countryside to ride out the COVID-19 pandemic. That means rental demand remained high, allowing landlords to raise fees.
Singapore expatriates are hit the hardest since most of them prefer private apartments, said OrangeTee & Tie Senior Vice President of Research and Analytics. While they are allowed to rent public units, most want to live in private apartments due to the amenities offered such as tennis courts and swimming pools as well as the closer proximity to their workplaces within the city centre.
The new cooling measures have made it more costly for foreigners to acquire a home in Singapore. As such, some expats who recently moved to the city-state are staying put in serviced apartments while looking for good rental deals.
Others, such as American national Shiv Sharma, plan to just accept the price hike. The senior executive at StockTwits, which is a social media platform for investors, shared that his real estate agent has warned him of a significant hike in rent once he renews his lease in March.
“The issue is my wife is pregnant and is due in February. So, it’d be tough to move around with a newborn,” said Sharma, who’s been living in Singapore for two years.
“If that wasn’t the case, I would 100% look for a better deal elsewhere if the rent of my current place is raised,” he added as quoted by Bloomberg.
Looking ahead, analysts see rental supply remaining tight next year. Building delays are forecasted to persist as the Southeast Asian nation curbs the flow of foreign construction workers amid uncertainty over omicron.
“For 2022 and possibly 2023, we do not expect the leasing market’s rhythm to return to anywhere near where it was before the pandemic struck,” said Cheong.
Cheryl Chiew, Digital Content Specialist at PropertyGuru, edited this story. To contact her about this story, email: [email protected].