Over the first three quarters of 2022, the rents for HDB apartments climbed by roughly 20%

There has been an impressive rise on HDB as well as private residence rents in the past two years. The most recent confirmed statistics on housing reveal that the volume of rental of public flats grew to 2.8% q-o-q and 4.2% over the course of 2Q2022 and reached 10,979 flats. In the same way to that, it was reported that the URA Rental Index for land-based properties increased for the seventh straight second quarter of 2Q2022, gaining 6.7% q-o-q.

Copen Grand at Tengah Garden Walk is based within the City Development Group and MCL Land. Both developers have become well reputed in Singapore.

The EdgeProp rental data that was compiled by Singapore’s Market Trends tool illustrates that over a two-year time period, from August 2020 until August 2022, the average condominium rents grew by 31% between $3.27 per month per psf, to $4.28 psf per month. In addition the average HDB rents increased by approximately 20% between $2.09 per sq ft to $2.51 per sq ft.

A dramatic shifting of HDB rents

As per Nicholas Mak, head of research and consultancy of ERA Realty Network, HDB rents have typically rose from 1.5% to 1.6% every year. “However it changed drastically last year, when the HDB rental rate increased by approximately 10.6% for the whole of 2021.” Mak states.

As per Lee Sze Teck, senior director (research) at Huttons Asia, HDB rents have increased by around 20% during the beginning of the year.

Lee states that construction delays that affected Build-To-Order homes and condos not yet completed “have an important role to play” in the high demand for rental homes in the last few months.

Lee says that Singapore’s opening to foreign tourists and the subsequent surge in activity and economic growth has resulted in increasing numbers of expats returning into the state of Singapore. In conjunction with construction delays that led to the increase in rents for both the HDB as well as private residence market Lee says.

Mak says that the continuous flow of fresh HDB supply coming into the market will not reduce rental pressures within the HDB market. “For each HDB flat that is offered to a buyer who is not a new one the flat is not able to be let out for rental, as per HDB regulations, over the course of five years. So, we’re probably to witness a decrease in the number of HDB flats available for rent,” he says.

According to HDB rules under HDB regulations, only flat owners who have completed their five-year Minimum Operating Period (MOP) can lease their apartments.

Therefore, the availability of HDB rental flats has decreased in recent months, according to Mak. Mak says that in 2H2021, around 21,000 flats were rented to their owner. In 1H2022, that number decreased to about 19,000 flats which is approximately 10% decrease in the number for flats for rental. HDB flats.

The rather restricted HDB renting market helping tenants who can’t afford the rents they are paying to live with their others and share the costs of a flat Lee says. Lee.

Temporary relief for tenants

A variety of new HDB as well as condo development are expected to be completed at the end of next year. It is hoped that some tenants who are waiting on the new houses will be able to be able to move out of their rental properties and open up more rental units available in the market, according to Lee.

Mak confirms that “in the past three years, there’s seen a steady growth in the amount of HDB flats which reached the finish line in their MOP for five years. The numbers hit an all-time high this year”.

However, this relief may be temporary as he anticipates the supply of rental flats to decline in 2023 and 2024. “Unfortunately the numbers for housing supply don’t indicate [continuedrelief for certain HDB residents,” he says.

Unexpected speed of improvement in private rental

According to Lee Lee, the rate of Singapore’s economic growth 2021 was quite unexpected, and a large portion of the positive vibe continued into 2022. The statistics taken from the Ministry of Trade and Industry reveal that over the course of 2021 the Singapore economy grew to 7.6%, in contrast to the 4.1% contraction in 2020.

“Businesses require more employees and are hiring more foreign professionals to fulfill their requirements. This is a factor in the rise in the demand for rental private homes for residential use located in Singapore,” says Lee.

In general, the rate of increase in residential private rents is a surprising trend this year, says Mak.

“Before the pandemic, rents had increased at a slow rate of 1.4 up to 1.8% each year,” Mak says. Mak. “But after 2021, rents increased and accelerated particularly in the beginning of the year. In 2Q2022, rents had increased by around 16% per year.” This is 10 times the rate growth that the market experienced prior to the pandemic the outbreak, he says.

A rapid increase in rental rates and a limited rental supply within the Core Central Region (CCR) has resulted in the spread of tenants to city-fringe or even suburban areas, according to Lee. This has an indirect effect, as tenants in city-fringe areas are now seeking cheaper rental homes in suburban areas Lee declares.

In the future, Mak says the rental market is likely to improve in the next few months. “This year we anticipate around 14,000 to 15,000 residential units for private homes to be built and, next year the number of units will rise to around 17,000 units. Some of these houses are then rented out,” he says.

But, he doesn’t expect to see a decrease in rent prices due to the tight labor market or an ongoing demand for leasing for private apartments.

Property cool measures yet again

The most recent episode of EdgeProp’s month-long Real As State video series which was released on September 30th, focuses on the reasons behind the recent increase in rents within the marketplace. On the day the episode’s release the government declared the most recent series of property cooling measures at 11:11 pm.

This time the government’s intervention is designed to ease the burden of higher interest rates and reduce house prices.

Two fresh measures are notable for the rental and public housing market. For property loans provided through private institutions Singapore’s Monetary Authority of Singapore will raise the interest rate for the medium-term ceiling that is used to calculate the total debt-to-debt ratio (DSR) and the mortgage service ratio (MSR) by 0.5 percentage points.

In citing the “clear upwards trend in HDB price resales” The government has put in place a wait-out time that is 15 months long for residential private property homeowners (PPOs) as well as ex-PPOs who want to purchase a subsidised HDB flat for resale as a temporary solution to curb the demand and ensure that resales flats are affordable for those looking to buy flats and first-time buyers.

The new wait-out timeframe is not applicable to seniors who are 55 or over (and partners) in the process of moving out of their own property to an apartment with four rooms or a smaller apartment.

Wait-out time

Christine Sun, senior vice-president of research and analytics for OrangeTee & Tie, says that the 15-month wait-out time “may slow the market down for a time and slow the rate of price rises for these larger flats to a certain degree and also give young couples a better chance at finding these homes with less competition”.
Tricia Song, the head of research Southeast Asia, CBRE, states: “We believe the 15-month delay in the waiting-out period can actually in the development of the rental market, both for public and private housing, particularly since more housing completions are scheduled to come through in 2023.”

But Mak proposes a new viewpoint: The buyers who are exempt from the waiting-out period will be required to lease the property for at minimum 15 months. “This will boost the demand for residential rentals in the market, which will lead to greater growth in rental,” he says.

“The current set of cooling measures are likely to affect the market for public housing including the modification of the MSR and the waiting period of 15 months” Sun says. Sun. Sun adds that it will be the first time significant cooling measures are introduced in the public housing market. There may be a bigger knee-jerk reaction later on.