PropertyBT: Navigating Singapore’s private home rental market
IN THE wake of the COVID-19 pandemic, the global economy experienced numerous shifts. In Singapore, the rental housing market too has been significantly affected.
In this episode of PropertyBT hosted by Leslie Yee, senior correspondent at The Business Times together with his guest Alan Cheong, executive director and head of research and consultancy at Savills Singapore - delve into the evolving landscape of private homes leasing in Singapore.
Key insights to help both tenants and landlords
The pandemic brought about fundamental changes in the leasing market. Post-pandemic, open market rents for both HDB flats and private homes experienced a sharp increase. Leasing activity rebounded, but a shortage of housing stock posed challenges. Today, while rents for HDB flats are still on the rise, private housing rents have seen a year-on-year decline, primarily due to an increase in new home completions.
In the current market, tenants appear to hold more bargaining power. As Alan notes, the demand for rental units has stabilized, while supply has increased. This shift has created a more tenant-friendly market, enabling renters to be more selective. With ample choices available, tenants can explore options from HDB flats, which require a minimum six-month rental period, to private homes with a three-month minimum lease term, and even co-living spaces.
Expats, especially those with families, often show a demand for landed homes due to the space and budget flexibility these properties offer. Conversely, rising rents for non-landed private apartments have pushed some expats, particularly those not on expat terms, towards the HDB rental market as a more affordable alternative. Thus, the private and HDB rental markets are closely intertwined, with shifts in one often impacting the other.
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When it comes to geographic preferences within the private home sector, prime areas such as Orchard, Holland, Bukit Timah, River Valley, and Katong remain popular among tenants. Surprisingly, one- and two-bedroom units in these areas have gained traction.
Changing tenant profile
In the past, tenants were predominantly expatriates from developed countries. However, recent years have seen a more diverse mix, including South Asians, other Asians, and even Singaporeans. Today, approximately 60 per cent of tenants are foreigners, with the remaining 40 per cent being locals, including single women moving out of their family homes or individuals undergoing marital transitions.
Leslie and Alan emphasise the importance of understanding market dynamics for both tenants and landlords offering both tenants and landlords practicable advice. One such piece of advice is that landlords need to be proactive in maintaining and upgrading their properties.
Is it still worth being a landlord
Yields for private residential properties have remained stable, ranging from the low to high 3 per cent in gross terms. However, landlords face challenges such as rising property taxes and maintenance fees, which can erode net returns. The realities of increased non-owner-occupier residential property tax rates and inflation-driven hikes in condo management fees further underscore the importance of prudent financial planning for property owners.
Despite the current tenant-friendly market conditions, owning rental properties in Singapore continues to be a solid long-term investment. Economic conditions and supply-demand dynamics will invariably shift over time.
As highlighted in this PropertyBT podcast, the landscape is ever-changing, and staying informed will help you make the best decisions for your rental needs. Listen now.
For more episodes, go to bt.sg/podcasts and if you have feedback or an episode idea, please get in touch at btpodcasts@sph.com.sg.
Here’s more PropertyBT podcasts you may be interested in:
How to navigate the home leasing market to get an edge
Should BTO applicants buy HDB Plus and Prime flats?
Get to grips with the HDB resale market
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