We tried to talk to the Housing Development Board (HDB) about why the housing rental market has become so expensive and the reasons why. The answer they gave us was “The rent for subletting of whole HDB flats depends on market conditions and varies for different estates and flat types.” How helpful. So instead, we sought the expertise of Nicholas Mak, director of the Consultancy and Research Department at Knight Frank, to get more information.
So how bad is it, really?
“The housing rental market picked up in the last three months of 2006. If we look at island-wide figures, rental accelerated in third and fourth quarter of 2006 from 1.1 percent in the first quarter of the year to 5.3 percent in the fourth. So for the whole of 2006 housing rental increased 14.1 percent. We haven’t seen such high rate of increase over 12 months since 1991. Even during the property boom of 1996 there was only about an 11 percent increase year on year.”
And the reason is…
“There is an increasing demand as more foreigners come to Singapore to work but there is also a reduction in supply. That’s because there are lots of enbloc sales especially in districts 5, 9, 10 and 11. So some properties that were formerly rented out now have landlords who are reluctant to commit to long leases because they are waiting for prospective collective enbloc sales, while short leases are not attractive to tenants.”
But is this just limited to private condominiums? Are those of us living in HDB flats effected too?
“There is some spillover demand into the HDB sector. Top management can’t afford the areas they used to live in anymore, so they move to another area. As a result, everyone gets pushed down. But the increase in HDBs is not that sharp.”
What about the corporate rental sector?
“Office space in general has also gone up quite sharply, more than residential. Overall for whole of 2006, corporate rental space went up by 30 percent. Just in the last three months of 2006 it went up by 11.6 percent.”
So how long are we going to have to live with this?
“It’s hard to forecast demand in two to four years when the enbloc developments will be completed. If we are going to increase the population to 6.5 million gradually and the job market is still buoyant and the government still welcomes foreign talent, there could be enough demand [to keep prices as they are].”