If rents continue to grow steadily, more residents will bite the bullet and purchase a property before paying higher prices for rent, Knight Frank’s Christine Li said.
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SINGAPORE — Foreign residents in Singapore continue to feel the pinch as home rental prices soar and show few signs of returning to pre-pandemic levels soon.
Whether one’s renting a room, an apartment or a house, long-time expatriates living in Singapore are digging deep into their pockets and making drastic changes to cope with rising rents.
According to data from Singapore’s Urban Redevelopment Authority’s rental index, prices of all private residential properties surged by 29.7% year-on-year in 2022 — the highest since 2007.
Some foreigners living here say their landlords may be taking advantage of an overheated property market to jack up prices — with some doubling the rent.
Although the pace of rent hikes appears to be starting to slow, landlords can still expect to see double-digit growth in prices, said Christine Li, head of Asia-Pacific research at Knight Frank.
“If rents continue to grow steadily, more people will just bite the bullet and purchase a property before paying higher prices for rent,” she said.
But some industry experts say prices might ease in the latter part of the year.
“Relief is expected to come only from the second half of 2023 when the slowing economy and the fallout in the tech sector starts to work its way through the demand side of the rental market,” said Alan Cheong, executive director of research and consultancy at Savills Singapore.
“However, even if rents were to correct, it could be mild and not likely to retrace in any significant manner the rise that had taken place since 2021,” he told CNBC.
Some expats in Singapore said landlords are demanding more than market rates, and many are trying to find new ways to circumvent rising rents.
Francesca, an Indonesian expat who lives in Singapore with her family, will see her lease end this month. At the start of the year, her landlord asked for double the amount in order to extend her leasing contract.
The 34-year-old said her landlord had initially asked for a 60% rise in rent, but later increased it to 100%.
“Every time we negotiate, he raises the price … We were really pissed off because it was just not fair,” Francesca said, adding there were brand new apartments with better facilities a street away that cost less than what her landlord had asked for.
All the expatriates who were interviewed for this story did not want to reveal their full names.
While hunting for a more affordable home in the shopping district of Orchard, Francesca said she viewed apartments that “looked like they belong in a horror movie” but were listed for $10,000.
“I will film a horror movie there, but I’m not going to live there,” she said with a laugh.
Expats in Singapore with children in school find it difficult to move out of the country.
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Francesca said many potential landlords offered her “rent free deals” to convince her to agree to higher prices — that essentially translates to no rent for the first few months.
“This usually happens when somebody owns multiple properties, and they’re hoping if they can raise the rent on one property, they can do so with the others as well,” she explained.
Debbie, another expat in Singapore, was also offered a flexible contract.
The 42-year-old has been living in a condominium in the central neighborhood of River Valley for the past eight years, and her rent increased in December from $9,250 to $13,200.
Although she was initially quite upset by the 42% hike, she knew she needed to bite the bullet because the contract allows her to terminate the lease with just three months’ notice “as long as we leave the country.”
“I didn’t want to move for a very short period of time in case we were leaving,” she said. “Our landlord knew we were a bit desperate, so she pounced on that.”
Debbie said she considered leaving Singapore because her husband’s salary had “stayed exactly the same.”
“We have three children in international schools and the cost of living in increasing so quickly. Even with a higher tax rate back in New Zealand, we might be better off moving home,” she said.
In the end, her family decided to stay but had to cut down on dining out and taking taxis.
Francesca, on the other hand, managed to find a unit in the same condominium compound in Orchard for 50% more than what she currently pays, instead of the 100% increase her landlord offered.
But not everyone was as lucky.
When Melinda’s landlord wanted to increase the rent for her seven-bedroom house in Bukit Timah by 110%, she considered moving back to the U.S. Her neighbor faced the exact same situation and decided to move to Penang, Malaysia.
Melinda did not want to uproot her two children who were going to school in Singapore and decided instead to downsize.
She’s now living in an apartment along Orchard Road instead, where she lived when she first moved to Singapore a decade ago.
But thankfully, her rent is now less than what she paid a decade ago when she first moved in.
Kristen, a Singapore permanent resident, found herself in a situation a little different from the rest.
From 2019 to 2022, Kristen’s household of five lived in Bukit Timah. But late last year, her rent jumped from $9,000 a month to $15,000 — and no longer included previous benefits such as aircon servicing, garden maintenance and pool cleaning.
“This made me cry because I assumed we’ll stay there for a long time … But we couldn’t afford it, there’s no way we could,” said the mother of two.
“When we did the math, it just made sense to buy a property,” she said. Her mortgage for a private apartment is now $11,000 a month.
All private residential properties surged by 29.7% year–on-year for the whole 2022, Singapore’s Urban Redevelopment Autority said.
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Kristen, who is also a property agent, told CNBC that renters have some tough competition.
“It’s not like the past, where I can show my clients some properties on Monday, some on Wednesday, and some on Friday,” she said. If potential tenants see a place they like, they’ll have to immediately lock it in or “it’s going to be gone by Friday.”
Experts listed several elements that have contributed to skyrocketing rents, including lingering pandemic effects.
“A confluence of factors ranging from Gen Y and Z’s wanting to break away from their parents to work in [the] privacy from their own home, to an influx of foreign professionals, had driven demand,” said Cheong from Savills.
Singapore’s reputation as a “safe haven” during the pandemic surged when foreigners moved to the city-state to escape stringent measures in China and Hong Kong, Knight Frank’s Li said.
In addition to the rise in demand, labor shortage in the construction industry during the pandemic also contributed to delays, exacerbating inventory issues in the housing market.
“On the supply side, the pandemic induced delays in new completions had resulted in a tight stock of rental housing units,” Cheong noted.