The rents of various private non-landed properties increased by almost 4.1% during the first quarter of the year 2022. It is almost 2.7% higher than the value reported during the last quarter of the previous year.
As per the information available from the Urban Redevelopment Authority, the rents for the city and prime areas grew by almost 4.7% and 3.8%, respectively. Furthermore, the rents for landed properties surged by 5.3%, which shows a rise of 1.2% from the previous quarter.
Observations state that buyers have switched to the rental markets after experiencing turbulence in the market due to recently applied cooling measures. The vice president of R&A at OrangeTee & Tie, Ms. Christine Sun, recently stated that many of these are prospective home buyers that stepped out of the market due to cooling measures and are now putting their eyes on the rental market. The rising demand for rental properties is further pushing rents to higher levels.
Nicholas Mak, the head of ERA Singapore research and consultancy, recently reported that the new regulations pose a rise in additional buyer’s stamp duty from 12% to 17% for all the second time buyers in Singapore. In this scenario, several homeowners may not be able to arrange upfront capital for selling their existing properties. Once these people close the sale for their existing home, they need to move to the rented properties until they get new properties to move in.
It is also important to mention that the additional buyer’s stamp duty is increased from 20% to 30% for foreign investors in the Singapore real estate market. Experts in the real estate market state that buying a new home has become a costly affair for foreigners in Singapore. This is the main reason why even foreigners are showing interest in the rental markets, as they find it more convenient to pay rent instead of making a huge investment in a new purchase. Furthermore, the shrinking rental stock and the limited supply of new homes will also drive rents at some locations.
Several private homeowners have sold their units due to a considerable rise in the resale prices in Singapore real estate market. Moreover, the new completions in the local market are not able to meet up the rising demands in Singapore.
The construction sector is also affected by the coronavirus pandemic, and operations have been slowed down. Analysts even project a further rise in the rental market during the coming months, mainly due to the ease of restrictions for traveling and rising inflation rates. The climbing interest rates, maintenance charges, and heavier property taxes may further contribute to the rise in rental prices.
The reopening of the Singapore-Malaysia border will further increase the rental property demands near Jurong, Woodland, Sembawang, Yishun, and Causeway area. The rental demands will also be fuelled up by properties that are still waiting to complete due to lack of labor. Mr Sun has expected a rise of 8 to 11% in the rental market this year; however, Mr Mak estimated a 10 to 15% rise.
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