Rentals For Private Homes, HDB Flats Continue To Soar

Source : The Straits Times, Oct 27, 2007

Private home rents jump 11% while HDB flat rents surge 21% on landlords' increased expectat

TENANTS complaining about rising home rentals now have official figures to back them up.

Rents of private homes and HDB flats soared in the July to September period, according to the latest data released by the Government yesterday.

They climbed 11.4 per cent for private homes, on top of the 10.4 per cent increase in the previous three months.

This means that since January, private home rentals have already jumped by 32.2 per cent, compared with only 14.1 per cent for the whole of last year. They are now at their highest level in at least nine years.

As for HDB five-room flats, the overall median rental - the level at which half the rents are higher and half are lower - surged by 21.2 per cent in the third quarter.

One reason for the strong growth in rents could be the increased expectations of landlords, said Mr Leonard Tay, the director of research at consultancy CB Richard Ellis.

Rents are also being pushed up by an increasing demand for completed homes, and a shortfall in supply at the same time, he added.

A large number of collective sales in the last two years has led to the demolition of existing homes and has forced the sellers to become home seekers.

With no respite in sight - fewer homes are expected to be completed next year than average - rents will continue to surge, said Ms Tay Huey Ying, the director of research and consultancy at Colliers Internaitonal.

She said that according to yesterday's data, only 5,541 homes are expected to be completed next year. This compares with a net average of 7,670 new homes between 2000 and 2004, before the collective sale fever set in.

'If we take into consideration the withdrawal of units because of collective sales, there will probably be a net addition of only 3,500 to 4,000 homes next year,' she said. Due to this acute shortage of completed homes ready for immediate occupation, Ms Tay expects rents to rise between 40 per cent and 43 per cent for the whole of this year.

But she also predicts that the rate of growth will moderate after that. Her forecast for next year: a rise of 30 per cent to 35 per cent.

'We expect rents to continue to grow strongly, but we do expect growth to be slightly slower than it was this year,' said Ms Tay.

'This is partly because we are already coming from a high base. Also, we could be seeing resistance to higher rentals; people could be reconsidering Singapore as a place to live.'

Beyond that, she believes that home completions will shoot up in 2009, which may help to stabilise rents.

Yesterday's figures showed that rents grew across the board for non-landed private properties.

They rose 12.2 per cent in the core central region, which covers Orchard, Holland, River Valley, Bukit Timah, Marina Bay and Sentosa.

In the rest of the central region - stretching to Marine Parade, Queenstown, Geylang and Bishan - rents increased 11.9 per cent. For the rest of the country, rents went up 11.8 per cent.

This even rate of growth is likely to be the trend ahead, said Colliers' Ms Tay.

For HDB resale flats, median rents crossed the $2,000 mark for five-room flats in Bukit Merah and the Central area, as well as executive flats in Bishan, Kallang/ Whampoa, Clementi and Queenstown.

Overall, median rents were $1,200 for three-room units, $1,400 for four-room units, $1,600 for five-room flats and $1,700 for executive flats.


HIGH DEMAND, LOW SUPPLY

Rents of homes are also being pushed up by an increasing demand for completed homes, and a shortfall in supply at the same time, says Mr Leonard Tay, director of research at consultancy CB Richard Ellis.