Monday, January 9, 2012

Is Singapore home rental market’s future bright?

Some analyst believe that after the December 2011 property cooling measures, "the rental market could brighten for landlords in 2012 as home buyers defer buying units in the wake of the recent cooling measures:

"They believe the larger pool of tenants might stabilise the rental market or even drive a pick up of up to 5 per cent in rents over the next 12 months. These analysts’ comments are a contrast to earlier expectations that rents were set to fall as a large supply of completed units come onto the market this year. Analysts had predicted a possible softening of rents this year due to the new private and public homes that will be completed within the next few months."

I believe it is really early to talk about this kind of good news for landlords (and bad news for tenants) as 2012 will not only see a large supply of completed units, it will probably see a sharp drop in growth of number of foreigners here due to economic slowdown and expected headcount reductions in banking and financial services industry.

Renting a private unit is not for everyone in Singapore. Lowest rental price you would find will be 3,000 - 3,500 SGD per month in a country where average full time pay is 2,700 SGD per month. So if a family is not making more than 6,000 SGD, it is not possible to rent one. 

So, it requires some sort of high paying job to be able to rent a private unit here in Singapore. Unfortunately in late 2011, companies has started to freeze hiring or even started firing people in bulk among ranks of these kind of high paid individuals. In our Singapore job outlook bleak in 2012 we have talked about this, many banks has started firing staff in bulk and many are planning net headcount reduction in 2012.

It will be quite difficult to offset larger supply + less tenants with foreigners who will rent instead of buying a property. Many foreigners effected by additional buyer's stamp duty are probably not residing or planning to reside in Singapore but are just investing in Singapore. 

1 comment:

  1. Singapore home prices continues to rise and do you know, HDB resale flat prices rised 1.7% in Q4 2011.

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