If rents continue to rise steadily, more residents will bite the bullet and buy a property before paying higher rents, said Christine Li of Knight Frank.
fiftymm99 | moment | Getty Images
SINGAPORE – Foreign residents in Singapore continue to feel the hardship as home rental prices soar and show few signs of returning to pre-pandemic levels any time soon.
Whether renting a room, an apartment or a house, longtime expats living in Singapore are digging deep and making drastic changes to cope with rising rents.
According to data from Singapore’s Urban Redevelopment Authority Rent Index, all private residential property prices rose 29.7% year-on-year in 2022 – the highest level since 2007.
Some expats living here say their landlords could use an overheated property market to drive up prices — some are doubling rents.
Although the pace of rent increases appears to be slowing, landlords can still expect double-digit price growth, said Christine Li, head of Asia Pacific research at Knight Frank.
“If rents continue to rise steadily, more people will just bite the bullet and buy a property before paying higher rents,” she said.
Even if rents corrected, it could be mild and likely not track the rise that has occurred since 2021 in any meaningful way.
Alan Cheong
Savill’s Singapore
However, some industry experts say prices could soften in the second half of the year.
“Relief is not expected to materialize until the second half of 2023, when the slowing economy and the fallout in the technology sector begin to work its way through the demand side of the rental market,” said Alan Cheong, Executive Director for Research and Consulting at Savills Singapore.
“But even if rents corrected, it could be mild and probably not replicate in any significant way the increase that has occurred since 2021,” he told CNBC.
What expats are doing to deal with it
Some expats in Singapore said landlords are charging more than market rates, and many are trying to find new ways to avoid rising rents.
Francesca, an Indonesian expat living in Singapore with her family, is ending her lease this month. Her landlord asked for double the amount earlier this year to extend her lease.
The 34-year-old said her landlord initially asked for a 60% rent increase but later increased it to 100%.
“Every time we negotiate, he raises the price… We were really pissed because it just wasn’t fair,” Francesca said, adding that there were brand new apartments up the street with better amenities that cost less than hers landlord had requested.
All of the expatriates interviewed for this story declined to reveal their full names.
1. Moving to another location
In search of a more affordable home in the Orchard shopping district, Francesca said she looked at homes that “looked like they belonged in a horror movie” but were listed for $10,000.
“I’m going to shoot a horror movie there, but I’m not going to live there,” she said, laughing.
Expats in Singapore with children at school find it difficult to leave the country.
Justin Paget | stone | Getty Images
Francesca said many prospective landlords have offered her “rent-free deals” to convince her to agree to higher prices – which essentially means paying no rent for the first few months.
“This usually happens when someone owns multiple properties and hopes that if they can increase the rent on one property, they can do the same for the others,” she explained.
2. Possibly leave the country
Debbie, another expat in Singapore, was also offered a flexible contract.
The 42-year-old has lived in a condo in the central River Valley neighborhood for eight years, and her rent went from $9,250 to $13,200 in December.
Although she was initially quite upset about the 42 percent increase, she knew she had to bite the bullet because the contract allows her to terminate the lease with just three months’ notice, “as long as we own the land.” leave”.
“I didn’t want to move for a very short time in case we leave,” she said. “Our landlady knew we were a little desperate, so she pounced on it.”
Debbie said she was considering leaving Singapore because her husband’s salary “stayed exactly the same”.
“We have three children in international schools and the cost of living is increasing so fast. Even with a higher tax rate in New Zealand, we might be better off moving home,” she said.
In the end, her family decided to stay but had to eat out less and take taxis less.
Francesca, on the other hand, managed to find a unit in the same gated community in Orchard for 50% more than she is currently paying instead of the 100% increase her landlord offered.
3. Zoom out
But not everyone was so lucky.
When Melinda’s landlord wanted to increase the rent on her seven-bedroom house in Bukit Timah by 110%, she considered moving back to the US. Her neighbor faced the exact same situation and decided to move to Penang, Malaysia.
Not wanting to uproot her two children who went to school in Singapore, Melinda decided to downsize instead.
She now instead lives in an apartment on Orchard Road, where she lived when she first moved to Singapore a decade ago.
But thankfully, her rent is now lower than what she paid a decade ago when she first moved in.
4. Buying a property
Kristen, a permanent resident of Singapore, found herself in a slightly different situation than the others.
From 2019 to 2022, Kristen’s household of five lived in Bukit Timah. But late last year her rent went from $9,000 a month to $15,000 — and no longer included previous services like air-conditioning maintenance, yard maintenance, and pool cleaning.
“This made me cry because I assumed we’d be staying there long… But we couldn’t afford it, no way,” the mother-of-two said.
“When we did the math, it just made sense to buy a property,” she said. Her home mortgage is now $11,000 a month.
All private residential real estate is up 29.7% year-on-year throughout 2022, Singapore’s Urban Redevelopment Authority said.
Bloomberg | Bloomberg | Getty Images
Kristen, who is also a real estate agent, told CNBC that renters face stiff competition.
“It’s not like it used to be where I can show my clients some properties on Monday, some on Wednesday and some on Friday,” she said. When prospective renters see an apartment they like, they must lock it in immediately or “it’ll be gone by Friday”.
What drives prices up?
Experts listed several elements that have contributed to skyrocketing rents, including ongoing pandemic effects.
“A confluence of factors ranging from Gen Y and Z wanting to break away from their parents to work there [the] Privacy from their own homes to an influx of foreign professionals had fueled demand,” Savills’ Cheong said.
Singapore’s reputation as a “safe haven” during the pandemic rose as foreigners moved to the city-state to escape tough lockdown measures in China and Hong Kong, Knight Frank’s Li said.
In addition to rising demand, labor shortages in the construction industry during the pandemic also contributed to delays and exacerbated inventory problems in the housing market.
“On the supply side, delays in completions caused by the pandemic had led to a shortage of rental housing,” Cheong noted.