In an interview with 8 Vision News, Dr Naijia Li, Head of Property Intelligence at PropertyGuru Data Technology, said that residential rental prices are expected to rise by 5 to 10 per cent this year, a considerable slowdown from last year's increase of over 20 per cent.
According to property expert Mr Mak, last year's rental market was one of the "hottest" he had seen since he joined the industry, with private rental prices rising by 29.7 per cent for the year. But in the last two months, the rental market has shown signs of slowing down. He predicts that rent increases are likely to peak in the first and second quarters of the year and then begin to slow down.
The fact that rents will start to slow down is mainly attributed to several factors, including the fact that tenants are opting out of renting their own homes or not renewing their leases because of high rental prices, and instead opting to share a flat with friends or simply go for HDB flats, which will affect rental demand.
Mak Chun-wing said, "You used to be able to rent an entire four-way HDB flat for $3,000, but now the rent has more than doubled to $5,000 or $6,000. Some people may want to find another friend to share a flat or buy a government HDB flat themselves."
There are also some Malaysian tenants who have decided not to live in Singapore because the rent is too expensive. It is understood that some Malaysian blue-collar workers decided to go back to work in Johor, Malaysia a few months ago because they could not stand the expensive rents in Singapore.
Mr Mak also pointed out that the construction market, which was affected by the epidemic, has almost fully recovered and many pre-purchased HDB projects are expected to be completed this year and next year, with many people who used to wait for the completion of their pre-purchased HDB flats and rented out their flats, slowly moving to their HDB flats. In addition, 17,400 private housing units are expected to be completed this year and about 11,200 next year.
Dr Naijia Li noted that "some large projects, those with more than 1,000 units, are expected to be completed this year, which will somewhat have a calming effect on the rental market".
At the same time, many technology companies are laying off staff locally, which will have a knock-on effect on associated companies, and some of the expatriates laid off will leave Singapore, which will in turn affect demand for rental accommodation.
Unofficial estimates just released today (29) show that local rents for private and HDB flats continued to climb in February, although fewer flats were successfully rented out.
Huttons Property Group regional manager John Wong said he "was able to rent out a flat after one or two viewings last year, but in recent weeks, it may take more than 10 viewings to rent out a flat."
Despite the slowdown in rental demand, Dr Li Naijia said that rental prices are still high.
"Landlords are still putting up high rents because interest rates keep going up coupled with inflation, so they have to pass on the cost to tenants."
He advises landlords, "If there is a suitable tenant who is willing to pay a higher rent than you used to charge, take it! Otherwise if the rent is too high to find a tenant and then the market shrinks further, you'll struggle to fill it and the loss outweighs the gain."
