Analysts believe that private rents could rise by up to 28% for the whole of last year.
More private housing completions this year are expected to alleviate the lack of supply in the market, but with more expatriates coming to work and study and a new round of cooling measures, private rents are expected to continue to rise next year, but at a slower rate.
The reopening of the border and a tight labour market have driven demand for private rental accommodation this year. This trend will continue next year if our economy and job market remain stable.
In addition, delays in the completion of new homes, mixed working patterns and the return of foreign students have led to a significant increase in demand for private rental accommodation this year.
In addition, rising mortgage rates have caused landlords to pass on additional costs to tenants, and some shared living space operators are renting a large number of private homes from landlords and reconverting them into shared living spaces, thus further pushing up private rental rates, which are expected to rise by up to 28% for the year as a whole.
The fact that HDB flat buyers who have purchased new private homes have chosen to sell their HDB flats first and rent them temporarily to avoid paying additional buyer's stamp duty (ABSD) is also a factor contributing to the booming rental market.
Looking ahead, according to the Urban Renewal Authority and the Department of Statistics, some 18,234 private housing units are expected to be completed next year.
In this regard, while the completion of more private homes next year will go some way to alleviating the upward pressure on rents, the rental market will be supported by the fact that some industries are likely to continue to expand their recruitment next year, which will attract more foreign arrivals.
And those buyers affected by high house prices and the new round of cooling measures are also likely to continue to rent. A combination of factors will push rents up by between 13 and 16 per cent next year.
New additions to the private sector may not be enough to ease the pressure on the rental market, as many buyers of private homes in the Outer Central Region (OCR) and Other Central Region (RCR) are for owner-occupation, so there may not be enough new private homes entering the rental market.
He expects rents to remain between 10 and 15 per cent higher next year.
Continued rent increases may cause some tenants to move to places less convenient than their current residence. For example, moving from the city centre to a slightly more remote area.
This could therefore accelerate the rise in rents for private housing outside the central area.
Some analysts are also conservative in their view that with the opening of the border, expatriates will increase the frequency and duration of their holidays abroad or return to their home countries, leaving rented private homes vacant for long periods of time.
Therefore, they are reluctant to pay too much rent.
In addition, excessively high rents are already affecting tenants' affordability. These factors will slow down the rate of rent increase to 5 to 7 per cent next year.
As to when the hot rental market will cool down, it may take another 18 months before the market starts to cool down or adjust due to the disruptions and delays in work schedules caused by the epidemic in the previous two years.
However, even if it does adjust, the magnitude will not be too great.
New completions have increased the rental supply and will help to moderate the rise in rents. The rental market will start to stabilise in the second half of next year, but it will not slow down significantly.
If the government imposes cooling measures on the rental market, then rents will see a significant slowdown next year, with increases of less than 2 per cent.
However, the government should let market supply and demand regulate rental prices on their own and will not impose cooling measures on the rental market.
