Private Home Rents Surged In Q1 2022 Amid Cooling Measures, Lack Of New Homes

Published: Nov 27, 2023 by 
PropertyGiant Singapore
Overall, private home rents climbed at a quicker pace of 4.2 per cent in the first quarter. Credit: Lim YaoHui
Overall, private home rents climbed at a quicker pace of 4.2 per cent in the first quarter. Credit: Lim YaoHui

SINGAPORE - Rents of private non-landed properties accelerated in the first quarter of 2022 - rising 4.1 per cent, compared with 2.7 per cent at the end of the fourth quarter of last year.

This comes as rents in the prime and city fringe areas grew 3.8 per cent and 4.7 per cent respectively, while those in the suburbs rose 4 per cent, according to data from the Urban Redevelopment Authority (URA) on Friday (April 22).

Landed property rents surged 5.3 per cent, outpacing the 1.2 per cent rise in the previous quarter.

Overall, private home rents climbed at a quicker pace of 4.2 per cent in the first quarter, compared with 2.6 per cent in the previous three months of last year.

Buyers could have turned to the rental market after being affected by new property cooling measures introduced in December last year, analysts said.

Ms Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, said: "Many would-be home buyers who were priced out of the market or were affected by cooling measures turned to the rental market. They are boosting rental demand and pushing rents higher."

ERA Singapore head of research and consultancy Nicholas Mak said that due to the increased additional buyer's stamp duty (ABSD) from 12 per cent to 17 per cent for Singaporeans buying their second properties, some home owners may not have enough upfront capital before selling their current properties.

"After selling their existing homes, these people will have to rent while waiting for their new properties to be completed for them to move in," he added.

The ABSD is 30 per cent, up from 20 per cent, for foreigners buying any residential property.

Mr Mohan Sandrasegeran, a research and content analyst at Ohmyhome, noted that buying a home in Singapore has become more costly for foreigners.

"Foreigners are diverting the interest towards the rental market, as they might feel that they are better off renting a unit instead of buying," he said.

Shrinking rental stock and a lack of new home supply also drove up rents in some locations, Ms Sun noted.

"Some private home owners sold their units as resale prices have been on the rise. New completions were also unable to keep pace with housing demand," she added.

The construction industry has been affected by pandemic slowdowns.

Analysts expect rents to rise further in the coming months due to the easing of travel restrictions alongside inflation and rising costs.

Ms Sun said: "Higher maintenance charges, climbing interest rates and heavier property taxes may have a snowball effect on rents. Some landlords may pass the increased costs to their tenants, causing rents to climb further."

The reopening of the land border between Singapore and Malaysia will drive rental demand in areas near the Causeway, as well as in areas like Yishun, Sembawang, Woodlands and Jurong, she said.

Mr Sandrasegeran said rental demand will also be fuelled by those who are looking for interim alternatives while waiting for their properties to be completed.

Ms Sun expects rents to rise at a quicker pace of around 8 per cent to 11 per cent this year, while Mr Mak estimates a 10 per cent to 15 per cent increase.

URA's first-quarter data also showed that rents of office space in Singapore's central region rose 1.6 per cent in the first quarter of 2022, compared with a 0.9 per cent increase in the previous quarter.

Prices grew 4.4 per cent, reversing from a 1.8 per cent decline in the previous three months.

The amount of occupied office space decreased by 13,000 sq m of net lettable area (NLA), compared with the dip of 10,000 sq m in the previous quarter.

The stock of office space declined by 17,000 sq m NLA, versus a decrease of 23,000 sq m in the previous quarter.

As a result, the islandwide vacancy rate of office space remained unchanged at 12.8 per cent as at the end of the first quarter.

Rents of retail space in the central region of Singapore fell by 0.4 per cent in the first quarter of 2022 after rising 0.6 per cent in the previous three months, URA's data showed.

Prices of retail space in the central region dipped 1.4 per cent, after a 1.9 per cent growth in the previous quarter.

The amount of occupied retail space dropped by 12,000 sq m NLA, after an increase of 25,000 sq m NLA in the previous quarter.

The stock of retail space rose by 1,000 sq m NLA, after increasing by 25,000 sq m in the previous quarter.

As a result, the islandwide vacancy rate of retail space grew to 8.3 per cent at the end of the first quarter, up from 8.1 per cent in the previous quarter.

Credit: Straits Times

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