S’pore private rental prices jump 30% in 2022, fastest pace in 15 years; experts expect slower rise in 2023

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Singapore — Rental prices for private housing in Singapore soared by nearly 30% last year. This is her biggest rise since 2007, when U.S. home prices soared and sparked the global financial crisis.

Analysts expect private housing rents to rise, albeit to a lesser extent, this year.

They said a variety of factors, including delays in completing private housing projects, caused rents to skyrocket here last year.

Other reasons include an increase in demand for private rentals, both as a result of the return of foreign students looking for places to live and measures taken by the government to cool the public housing market.

The government announced last September that private property owners must provide services. 15 months waiting period Before you are allowed to buy an unsubsidized resale Housing Development Board (HDB) apartment after you sell your home. Some exceptions apply.

The purpose was to brake HDB resale price increasebut a real estate expert said today that it has the secondary effect of encouraging driving. Demand for private rentals Affected private home sellers are considering leasing the location for 15 months.

Prior to the announcement, current and former private property owners will be permitted to purchase non-subsidized HDB resale flats on the open market, with the requirement that the private property be disposed of within six months of the HDB flat purchase. It was done.

A 29.7% rise in private land rental prices over 2022 was reported in data released by the Urban Development Authority (URA) on Friday (January 27), following a 9.9% rise in 2021 already It’s been a pretty big increase.

The largest increase in Singapore rents before 2022 was in 2007, with rents jumping 41.2%.

No one has suggested that there are parallels, but 2007 was the year that US housing prices crashed. Poor people who cannot repay.

As borrowers failed to meet their repayments, loans, then known as “subprime” loans, were repackaged into complex investment products that even some financial experts cannot comprehend.

In September 2007, when the U.S. financial scene began to realize what was happening, various large U.S. investment firms and other financial firms teetered on the brink of collapse, leading to a global financial crisis. Connected. 1920’s.

Second-order effects on rents of private residences

Lee Sze Teck, senior director of research at Huttons Asia, said factors driving the rise in rental prices include delays in completing new homes that have constrained supply, and people wanting to rent larger homes. said it included the continuation of hybrid work arrangements that could result in and return of international students.

Additionally, cooling measures introduced in September may have forced former private property owners to rent while they waited to buy HDB’s resale apartments, further boosting rents.

Christine Sun, senior vice president of research and analysis at real estate firm Orangetee, said private-sector rents are not expected to rise much this year, but still expect them to rise 13-16%. Not as much as last year, but still a significant increase.

Downward pressure on rents will be fueled in part by a significant increase in housing supply — about 19,291 new private homes, including executive condos, are due for completion, Sun added. A hybrid of public-private housing built and sold by a private developer, but subsidized by the government.

This could ease some rental pressure, especially in suburban and peri-urban areas, she said.

But Lee said this increase in supply may not bring immediate easing to the rental market.

Many of the projects slated for completion are outside the URA-designated core core areas, and homes are typically purchased to live in rather than for investment purposes. So there may not be many new homes for rent, he said.

Private residences are more likely to be rented to tenants in central areas, including areas such as City Hall and Sentosa.

Lee added that new projects tend to demand higher rents than older projects.

Steady increase in HDB rents in 2022

HDB rents look set to rise steadily rather than dramatically in 2022, but in a press release HDB does not provide overall figures for last year’s flat rent growth.

But one of the biggest rises was in Queenstown, where median rent for a five-room HDB flat rose 17% to S$4,200 in the previous quarter, from S$3,600 in Q3 2022. Did.

This compares to the same flat of S$3,200 in Q2 and S$3,010 in Q1.

Despite rising rents, the amount of leased HDB apartments plummeted. Overall in 2022, he has 36,166 units leased, which is 15.1% less than he had in 2021 with 42,623 units. Also, in 2020 he is below 38,798 units.

OrangeTee’s Sun said rental demand has shrunk since rents rose, reducing available rental inventory.

She added that fewer units will be put up for rent this year as fewer apartments reach the minimum occupancy period. The apartment owner has to fulfill her five-year residency period before selling the house.

This drop in supply, combined with a decline in housing stock, could push up rents.

However, a weaker economic outlook and inflation could slow rent growth to between 15% and 18%, Sun said.

Private housing prices

Private housing prices are also rising, rising 8.6% over 2022, slightly below the 10.6% increase in 2021.

Indeed, the latest data suggests a downward trend, with private house prices rising only 0.4% in the fourth quarter of 2022 compared to the third quarter, and a 3.8% quarter-on-quarter increase in the third quarter. has declined significantly from .

Dr. Lee Nai Jia, head of property intelligence, data and software solutions at PropertyGuru Group, said the lack of new major property launches has contributed to lessening price gains.

rising interest rates “Revenge travel” also led to a decline in prices and sales volumes as Singaporeans spent money on long-awaited overseas trips in the fourth quarter, according to Dr. Lee.

Home price gains last year were uneven across the country, with the core central region gaining 4.8%.

On the other hand, property prices in the rest of the central region, including Buona Vista and Katong, and in the non-central regions (Bedok, Hogan, etc.) increased by 9.7% and 9.3% respectively.

A moderate rise of 0.4% in the fourth quarter of 2022 suggests that prices may eventually stabilize, but Dr. Lee said private property prices in the resale segment could fall soon. said to be of low quality.

This is due to limited supply and the low likelihood of owners lowering prices in the short term.

Huttons Asia’s Lee said construction costs and low market unsold could put upward pressure on property prices by up to 5% in 2023.

In agreement, OrangeTee’s Sun predicts that private land prices will rise by 5-8% this year.

“We expect buyers to remain cautious this year given rising interest rates, inflationary pressures and uncertainty in the global economy. Interest rates will continue to rise as inflation is not expected to be temporary. it is possible,” he said.

Prices for resale HDB flats It also rose at a slower rate of 10.4% last year, compared to a 12.7% increase in 2021.

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