Why are family rentals so expensive in Singapore right now?

Looking to move or rent in Singapore and wondering why oh why are the rents that high right now?

Are you frantically looking for a family condo but find that rental prices have jumped? We chat with fellow mum and estate agent Nadia Ederer to find out why rental prices in Singapore are so crazy right now, and don’t miss her tips on how to navigate the rental market in 2022.

Estate agents here in Singapore have been repeatedly asked why rents have increased over the past few years. Specifically, rents in Singapore have skyrocketed during the Covid-19 pandemic. Due to travel restrictions and closures, many expats have left their homes and left Singapore. Singapore’s population has shrunk by around 18,000 since the start of the pandemic. So, it would seem that housing demand and prices should be low, but this is not the case and everyone is wondering why.

There are actually other factors at play. Shifts in supply and demand among local Singaporeans are actually the main driving factors. Right here. I’ll explain why rental prices are on the rise, what the 2022 Singapore rental market outlook might look like, and tips on how families can navigate the current market.

Why were rental prices so high in Singapore in 2021?

1. Delays in housing projects

The pandemic has had a significant impact on migrant workers working in construction – not only due to the spread of Covid-19 among this group, but also due to restrictions on their entry and exit from Singapore. Workers were unable to come to work, projects were suspended and supply chains were interrupted. These factors have caused massive delays in housing projects to house Singaporeans.

For Singaporeans who had long-term plans (often up to 3 years in advance!) to move to places like newly built HDB apartments (also known as built-to-order or BTO apartments), these housing delays have left them left without a place to move. Consequently, more of them are turning to the rental market for housing so that they can pursue their life plans, such as getting married and starting a family.

2. Young adults left multigenerational homes for their own space

Another factor driving up prices is work from home and home learning situations. In Singapore, many young adults live with their parents in multi-generational homes. But working from home and learning from home has made many multi-generational homes feel very cluttered (and sometimes unprofessional). Consequently, rental demand increased when young professionals decided they needed their own space.

3. The resale market is on the rise

As the housing market was on the rise, many people took advantage of the time to sell their HDB home and upgrade to a condo. While many people are selling their homes, they aren’t quite ready to buy their new condo yet, so they’re renting in the meantime. This causes a domino effect that drives up rental prices.

Read more: Singapore Condo Reviews: A Real Conversation About Pros, Cons, Amenities, Location, and Family-Friendliness

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4. Singaporeans don’t go abroad

The pandemic has caused a lot of global uncertainty, so many Singaporeans have chosen not to accept overseas jobs. This meant that fewer units were vacant and open to tenants. Additionally, Singaporeans who were abroad have returned and reoccupied houses they would normally have rented.

5. Viewing restrictions have made buying a home more difficult

Many restrictions have been created during the pandemic to limit the number of people who can visit a property while it is occupied. This made it very difficult to get views. But many people are desperate for their new home, so they were willing to pay higher prices to get a place, sometimes without a visit. This prompted sellers to raise prices.

Will rental prices stabilize in 2022?

We all want the answer to be “yes!” but the delays and restrictions won’t disappear overnight. Instead, 2022 will likely be a catch-up year. The construction market is recovering, but it will be even slower than in previous years. Buyers don’t want to take a risk on construction, so demand will continue to be high for resale and rental units.

Additionally, as the borders reopen, housing demand and prices will continue to be high.

How are we navigating the rental market in 2022?

Since so much is out of our control in the rental market, what can we do? Unfortunately, we just have to accept the current situation. But it’s important to stay informed of market trends and plan ahead knowing that prices are going to be high. Many buyers are still waiting to find the gold nugget, but it is very rare.

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1. Keep your budget realistic
At the moment, the priority is to find a place in your budget. It’s not about manipulating prices. Rental prices are hard to negotiate right now. The maximum trade real estate agents see is maybe 5-8%, if at all. If you try to play prize games, chances are you’ll lose the spot to someone who’s willing to pay more. So keep your research realistic, make offers on demand, and don’t waste your time looking for options that are over budget.

2. Broaden your search
To keep prices lower, consider downsizing, moving to less popular areas farther from the city center and looking for older resale properties instead. It may not be convenient for everyone, but everything is close at hand in Singapore and there are plenty of great places to live outside of the trendy districts.

3. Find representation
Get represented by an agent to help you in your search for accommodation. Find someone you know, like and trust who can facilitate the process and advise you accordingly. Landlords are represented by agents, so you as a tenant also have the right to be represented.

4. Talk to your landlord
Finally, if you can’t move but you can’t stand the high rent prices, talk to your landlord. See if you can get your lease extended with an exit clause. A 3-month exit clause will allow you to stay in your current place while you search for new housing options, and you can end the lease early if you find something you like.

About Jermaine Chase

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