singapore property market

For the first time since 2013, rents for residential property above 2013 levels in April, and this trend is projected to continue as Singapore reopens and more foreigners return to the workforce.

It has already been 16 months since the last high in January 2013, when condo rentals jumped by 1.8 percent. Year-on-year rentals rose 15.1% compared to April 2021.

Similarly, HDB apartment rents rose for the 22nd month in a row, showing the same upward trend. During the month of April, HDB rentals rose by 1.9% and 14.3% year-on-year. In August 2013, HDB rentals reached their highest point.

However, the volume has decreased in the recent month. It was down 21% from March, when there were 4,497 units leased out, to 3,551 condos in April. This is a decrease of 28.9% from the previous year and a decrease of 23.2% from the 5-year average for the month of April.

Leasing activity in the HDB market was also down. In April 2022, there were 1,382 units sold, a decrease of 20.7 percent month-on-month and 24.5 percent year-on-year. For the month of April, this volume is 28% lower than the five-year average.

There is a scarcity of rental apartments in Singapore due to the prolonged building of HDB flats and condominiums, according to market observers.

 

High Demand and Low Supply of Rental Units

Because of the high competition and scarcity of available flats, some tenants have booked units without ever seeing them. Some flats were sold beyond their asking rentals in order to obtain them swiftly,” OrangeTee & Tie’s senior vice-president of research and analytics, Christine Sun, said.

In spite of this, “rents have been climbing over the previous several months, and market resistance might be building in,” claimed the Sun. Sharing expenses is a growing trend among renters. Instead of renewing their leases, several Malaysian expatriates are opting for more frequent trips over the Causeway, which is a cheaper alternative for these employees.”

Property experts foresee a change in the rental sector as Singapore widens its travel boundaries.

Although the Vaccinated Travel Framework (VTF) has been implemented, Knight Frank’s director of research Leonard Tay indicated that tenants would likely keep their contracts owing to the uncertainties around Covid-19. His prediction is that as travel restrictions become more stable, Singapore would witness an increase in the number of professionals and skilled employees arriving.

“Anecdotally, people who were based in Hong Kong have also contributed to the rise in rents,” he added.

For this reason, the CCR and RCR in particular are seeing an increase in the demand for bigger rental apartments, according to Cushman & Wakefield’s Wong Xian Yang, head of research.

Additionally, some Malaysian employees have elected to reside in Singapore rather than travel everyday across the border, which is expected to significantly increase rents.

But Huttons CEO Mark Yip remarked that many Malaysians are renewing their leases with a wait-and-see attitude since they are uncertain as to whether the borders will remain open.

A stabilization of the economy may lead to some Malaysians letting go of their rental properties in the future, he said.

 

Borders Reopening likely spur demand of Rental Units

Wong added: “Although the reopening of borders would lead to some individuals returning to their home countries, we predict demand to rise on balance, supporting future rental increases.” “Private residential rentals might rise between 6 percent and 9 percent between 2022 and 2023, although rental growth could be moderated due to increased availability.”

For the whole year 2022, ERA Realty head of research and consulting Nicholas Mak anticipates that HDB and condo rental indices would continue to climb at a rate of 8 per cent to 12 per cent.

 

Rise in Rental across the board

In April, rents for private apartments in the core central area (CCR) rose by 3.1 percent, followed by the outside of central region (OCR) at 2.1 percent, and the remainder of central region (RCR) at 1.8 percent. The CCR, RCR, and OCR all had increases of 14% to 16.5 percent over the previous year.

The median rental price in District 25, which mostly consists of Kranji and Woodlands, increased the most. Rents in the region rose by 43.8 percent year-on-year, which is 15.5 percentage points more than District 17, where Changi International Airport is located, which had an increase of 28.3 percent in the same period. Rental prices in MacPherson, Potong Pasir and Braddell (in District 13) and District 25 (in District 26) increased by 15% month over month in February. Annually, the growth rate in District 11 (Novena, Newton, and Thomson) was 12.5%.

As opposed to District 3 and District 4, where median rents fell the most each month, by roughly 7.1% in Alexandra, 6.3% in Tiong Bahru, and 6.3% in Telok Blangah, respectively.

The paucity of transactions in Districts 6 (City Hall and Clark Quay) and 24 (Lim Chu Kang and Tengah) prevented the calculation of median prices. With the exception of these two groups, median rents increased year over year in every area studied. districts 1, 2, 13, 16, 17, 25, 26 all rose by more than 20 per cent while districts 3 (Bukit Timah), 4 (Holland Village), 10 (Tanglin) expanded by less than 5 per cent.

The OCR accounted for 38.1 percent of total condo rental volumes in April, followed by the RCR at 32 percent and the CCR at 29.9 percent.

There has been an increase in 3- and 4-bedroom rentals quicker than smaller properties, according to Tricia Song, head of research at CBRE.

This might be owing to the need for greater areas for work-from-home tendencies, as well as increased demand from families who have sold their residences and are waiting for their new homes to be constructed.”

In the HDB market, mature estate rentals gained 2.2 percent in April, while non-mature estate rents grew by 1.7 percent. Non-mature estate rentals rose 14.2%, while mature estate rents rose 14.4% from the previous year.

All room categories saw an increase in April. HDB apartment rentals jumped 1.4 percent for three-room units, 2.3 percent for four- and five-room units, and 1.2 percent for executive flats.

For the three, four and five-bedroom apartments, annual rent increases of 13.2%, 14.7%, 15.1%, and 10.6% correspondingly were recorded over the course of a year.

Choa Chu Kang had the largest median rental price rise, up 11.9% from March and 23.7% from the same time last year.

Bukit Timah, Queenstown, and Bukit Panjang all witnessed significant monthly gains, rising by 11.3%, 9.7%, and 8.33%. As a result, the median rents in Ang Mo Kio and Yishun both dropped 2.3%.

On an annual basis, HDB apartments in Clementi had a 20 per cent rise, while those in Bukit Panjang saw an 18.2 per cent increase and Sembawang saw a 17.9 per cent increase. In the Central Area, there was no change in the median monthly or annual rents.

In April 2022, 37.4 percent of the entire volume comes from 3-room flats, 36.7 percent from 4-room, 21.9 percent from 5-room, and 4.1 percent from executive flats, according to the breakdown by room type.