A substantial ramp-up in the supply of housing in the coming year may help ease the rental pressures of private property felt this year, according to a recent report.
Ms Christine Sun, Senior Vice President of Research & Analytics at OrangeTee, said in a Dec 23 report that more than 18,000 private homes are slated for completion next year. This figure excludes executive condominiums (EC) that are also scheduled to be completed in 2023.
The rates for private rentals have been going up in the past two years due to demand far outstripping supply, and the newly completed homes should help ease this situation, particularly in city fringes and in the suburbs, Ms Sun’s report said.
“There could be some relief in sight for HDB upgraders and Singaporeans as they wait for the completion of their new homes. There will be more housing options, and possibly an increased number of suburban homes offering affordable rents.”
This does not mean, however, that rents will not increase anymore. In 2022, rents went up by an estimated 26 to 28 per cent. This year, they’re still expected to rise but at a slower pace, by around 13 to 16 per cent.
“Landlords may not be willing to drop rents given the higher cost of living, higher property taxes, and increased mortgage rates,” the report added.
And in the long term, the rental market is still expected to tighten, even as the supply of housing increases. Tenants are signing longer leases of two to three years, and the rental stock continues to decrease.
As for the public housing market, the trend is expected to be the same. Rents of HDB flats may also rise at a slower pace of 15 to 18 per cent in 2023 after reaching an estimated 26 to 28 per cent this year.
Ms Sun added that “Rising home prices and cooling measures may also cause some to turn to the rental market instead of buying a new home.” /TISG
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