Over the last two years or so, moving out and renting your own place has become quite the trend. Previously thought to be only something that foreigners, expats, or newly married couples might do, making the decision to fly the coop and live independently is fast becoming a rite of passage for Gen Zs and millennials alike.
Of course, this significant shift in consumer behaviour has had an effect on the overall rental prices across various estates and housing types here in Singapore. But how much exactly has it shifted? What will the outlook be like in the next few years? Read on for our take on how to navigate rental prices in Singapore for this year and beyond.
Why has renting become so popular?
Before we dive into the numbers, let’s talk about why renting has become so popular as of late.
Image credit: TheSmartLocal
Prior to 2020, the majority of those in the rental market would have been largely foreigners/expats working in Singapore. Naturally, most would have turned to renting rather than committing the money to buy a home outright; this was mainly because of the uncertainty of how long they would be working in Singapore for, but there are also other possible reasons like having greater flexibility to move around or relocate to keep pace with work commitments.
And so, it was quite common to see foreigners relocating to Singapore with their families and renting an entire apartment, or in the case of singles, grouping together as housemates and living together in a shared apartment.
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Another group of people that would have been renting homes are newlywed couples waiting for their BTO.
As you may know, the point from which you successfully apply for a new flat to the point of key collection can take around 4-5 years. Some newlywed couples would want a temporary place of their own to stay in rather than with their parents or in-laws, and so renting would have been a viable short-term solution for them to tide through the wait for their BTO.
Image credit: TheSmartLocal
With 2020 and early-2021, the whole COVID-19 pandemic had profound effects on the overall rental market here in Singapore.
On one hand, the country lockdowns and border closures caused large groups of foreigners and expats to return back to their home country, which led to a decrease in demand for rental homes.
That being said, the period where we were all forced to stay at home for pretty much all the time might have frustrated some young adults, who were forced to work from home and live with their parents 24/7. Depending on how this turned out, it would have pushed more to consider moving out to be more independent, rather than having to deal with their parents all the time.
In addition, the pandemic had caused significant delays in the completion of BTOs, with longer wait times due to construction delays. Couples who were already waiting to collect their keys would have had to wait much longer, and so directly prolonging their rental tenure.
Rental statistics by the numbers
So how do the numbers stack up?
Rental Approvals by HDB
Image adapted from: HDB
Looking at the HDB’s rental statistics, the first two quarters of 2022 saw a total of 19,498 rental applications approved by the HDB. Compared with the same period last year, there was actually a drop of 2,157 (~10%) applications.
Median Rental Rates
With regard to prices, there has been some noticeable shifts in some estates, between 2022 and 2021. For reference, we’re using the HDB’s median rent statistics, which basically indicates that half the total number of units were rented above that price while half were below.
We’re also only looking at 3-room and 4-room flats which have been the most popular flat types across the years.
|Town||2Q 2022||2Q 2021||+/-||2Q 2022||2Q 2021||+/-|
|Ang Mo Kio||$2,000||$1,800||11%||$2,400||$2,200||9%|
|Choa Chu Kang||$2,050||*||*||$2,200||$1,900||16%|
*Denotes that there were less than 20 rental transactions in the town, and so the data would not have been statistically significant
Looking at the data, it’s pretty clear that over a year, rental prices have increased across the board. Most of the rental prices fairly commensurate with the location of the estate, and so places like Geylang, Queenstown, Bukit Merah and the Central region would see much higher median rents compared to places like Choa Chu Kang, Jurong West and Sembawang.
The estates with the highest increase over a year have been Woodlands – 31% in a year for a 3-room flat – and Punggol. Of course, this comes on the heels of rental prices hitting an all time high in the 1st quarter of this year.
We’d reckon that this is something not too surprising. After all, both Woodlands and Punggol are more or less the cheapest estates in terms of property and rental prices, and so that would be a draw for those on a budget looking to rent an apartment in these towns. In the case of Woodlands, the proximity to the Causeway would be a plus for Malaysians working in Singapore, as they can easily pop back home over the weekend while renting a flat during the week. Punggol is also popular for having relatively young flats, and ts proximity to industrial estates in the North and East.
How will the rental market shape up for the remainder of 2022
Image credit: Nguyen Thu Hoai
While there has been a slump in rental approvals so far, our take is that there will be an uptick in demand in the rental market for the rest of 2022, which will lead to a further increase in rental prices.
With borders now more or less fully open, we can expect more foreigners and expats to return to Singapore, and this would generate more demand for rental units. At the same time, it seems like the trend of chasing independence won’t be going away anytime soon, so expect a healthy demand for rental homes in the year to come.
Ready to move out and start renting your own place? Be sure to check out these articles first:
- Rent Or Resale: Is It More Worth It To Wait For Your BTO In A Temporary Flat Or Get A Resale Home Right Now?
- 7 Most Affordable Areas To Rent In Singapore So You Can Finally Escape Your Parents
- 7 Must-Know Tips For Renting In Singapore, As Revealed By Singaporean Millennials Who’ve Left Their Nest
Cover image adapted from: TheSmartLocal ,TheSmartLocal