Home rents saw unprecedented rises in 2022 YTD

SINGAPORE Rents of landed and non-landed residential properties recorded quarterly increases of 10.9% and 8.3% in 3Q2022. According to Savills Singapore, the rental index of these property types hit record levels in 24 years since the start of the URA time series in 4Q1998.

Notably, Savills highlights that two newly-completed projects in the Rest of Central Region (RCR) Stirling Residences and Park Colonial, fetched an average rent of $7.10 psf per month and $6.50 psf per month respectively.

These rents are comparable to those at prominent developments in the Core Central Region such as The Sail @ Marina Bay ($6.24) and Marina One Residences ($6.64).

Overall, residential leasing volume in 3Q2022 rose 20.5% q-o-q to a total of 25,382 transactions. This is the largest quarterly increase in leasing volume since 3Q2020 when rental transactions rose 34.6% q-o-q. The surge in the leasing volume of residential homes could be attributed to the return of foreign students and expatriates — as border restrictions and social distancing measures eased — coupled by locals seeking temporary replacement homes and delays in the completion of new homes. The residential leasing market is expected to remain tight for the rest of the year.

In 2023, the supply crunch in the rental market may ease with the completion of some 18,234 private residential units. Industry players are expecting the competition to get fiercer in the coming months as more private property downgraders rent while serving out the 15-month wait-out period before they can buy a Housing Board resale flat – adding to rental demand which is outstripping supply.

Under the latest round of cooling measures, which kicked in on Sept 30 2022, private home owners must wait 15 months after the sale of their current private property before they can buy an HDB resale flat without housing grants. Previously, they were allowed to buy a resale flat on the open market if they sold their private property within six months of the HDB flat purchase. The maximum amount that home buyers can take for HDB loans was also tightened.

The curbs took aim at the exuberant HDB resale market which has seen prices increase by around 8 per cent in the first nine months of the year, even in the face of rising interest rates. Rents for both HDB flats and condos climbed to an all-time high in the third quarter of 2022. In the first nine months of the year, HDB rents surged 20.7 per cent while condo rents rose 20.8 per cent.

In the last two years, pandemic-related delays in the construction sector, coupled with the influx of foreign talent, international students, and returning Singaporeans as Singapore gradually opened up, have led to the increased demand for rental units. While the rental market – which moves faster with a quicker turnover rate – may feel the immediate squeeze resulting from the cooling measures, property analysts said the full impact and effectiveness of the measures may only be seen in the months to come.