Rents are peaking!

[truthhurts1]

The place I am renting used to be 2350$ before the Corona virus , and last year the owner raised the rent to 3000$, now for renewing the contract they are asking me for 3900$ …
So I don’t think this rent peaking stands correct in many cases..greed wont let it happen and there are enough chumps who will be ready to pay these inflated rents as the company is paying for them especially the westerners who come here on short stints

[Wd40]

The place I am renting used to be 2350$ before the Corona virus , and last year the owner raised the rent to 3000$, now for renewing the contract they are asking me for 3900$ …
So I don’t think this rent peaking stands correct in many cases..greed wont let it happen and there are enough chumps who will be ready to pay these inflated rents as the company is paying for them especially the westerners who come here on short stints

Yeah, but this should be the peak. Don't lock in 2 years. Also if possible look around and forward the article to your landlord telling him rents are going down and you will move out unless he makes it 3500. It's absurd to go from 2350 to 3000 and then straight away to 3900.

In my case, my house is a bit run down, so I managed to get it below market rate in 2018. It is a 5i corner unit 1300 sqft house. The paint job and tiles and kitchen and bathrooms were okay condition. It is a 1996 TOP HDB. So I negotiated well and got it for $1800 when nearby houses were going for $2300. Then from $1800 after 3.5 years, in 2021 I again negotiated well and got it for $2300. Now in 2023, I again managed to negotiate directly with the owner for $3000. But then the agent came in the middle and screwed up the whole thing. The agent got scared that he will be cut off and won't get the agent fee. So he told the landlord that he is stupid to rent it to me for $3000 and he could easily get $4000. Which is BS. Then the agent offered me $3500. Initially under pressure I agreed. Then I looked around. Most 3 bedroom houses are $4000. But this time there are tonnes of houses available.

Here is the golden rule in the rental market. It is all about how much fomo the agent can create by bringing a horde of people to view the house. But this time, most expats in the low end have sent their family out of SG or moved out themselves. So the demand has just collapsed.

Now I told the agent $3300, or I will vacate. Agent came back with $3400. I stuck with the same figure. I told him I will move to a 2 bedder house for $3000, unless I can renew the current house for $3300.

So now we are playing the who blinks first game.

[NYY1]

The place I am renting used to be 2350$ before the Corona virus , and last year the owner raised the rent to 3000$, now for renewing the contract they are asking me for 3900$ …
So I don’t think this rent peaking stands correct in many cases..greed wont let it happen and there are enough chumps who will be ready to pay these inflated rents as the company is paying for them especially the westerners who come here on short stints

When in 2022 did you last renew? Early-2022 is a lot different than late-2022. Anyways, just look at URA for the transactions this year to get a sense of where things are actually at (keeping in mind that units in some buildings are more homogenous than others).

Some units may still be going up. However, I think a lot have flatlined this year, especially if something new and shiny is available across the street.

Good luck.

[NYY1]

This may vary based on the age and financing of the unit, but for some of the newer units I doubt owners with leverage will be willing to let them sit idle for very long. When rates increased several percentage points, this flipped the composition of the mortgage payment from mostly principal to mostly interest (at least in the initial years). Hence, why waiting for a high rental rate is good (as an owner), you need to weigh this against the interest expense incurred while the unit is idle, as this cost is fully gone/non-recoverable.

The above is probably why some people thought renting was expensive, and it was in isolation, relatively speaking, but you still need to consider the opportunity cost of all the capital plowed into a unit.

[truthhurts1]

This may vary based on the age and financing of the unit, but for some of the newer units I doubt owners with leverage will be willing to let them sit idle for very long. When rates increased several percentage points, this flipped the composition of the mortgage payment from mostly principal to mostly interest (at least in the initial years). Hence, why waiting for a high rental rate is good (as an owner), you need to weigh this against the interest expense incurred while the unit is idle, as this cost is fully gone/non-recoverable.

The above is probably why some people thought renting was expensive, and it was in isolation, relatively speaking, but you still need to consider the opportunity cost of all the capital plowed into a unit.

thank you very much..
I renewed my contract last in end of November 2022, so the next renewal is 2023.
I just saw on a property website propertyforsale.com.sg that the rental in my building for my kind of unit 500-600sqft have recently rented for 3000$ in July 2023.

I don’t know why the owner of my unit is asking for 3900$,
Also similar units in my building are now being advertised on . for 3700-3900$
So maybe the owner saw that and trying to do the same.

[truthhurts1]

The place I am renting used to be 2350$ before the Corona virus , and last year the owner raised the rent to 3000$, now for renewing the contract they are asking me for 3900$ …
So I don’t think this rent peaking stands correct in many cases..greed wont let it happen and there are enough chumps who will be ready to pay these inflated rents as the company is paying for them especially the westerners who come here on short stints

Yeah, but this should be the peak. Don't lock in 2 years. Also if possible look around and forward the article to your landlord telling him rents are going down and you will move out unless he makes it 3500. It's absurd to go from 2350 to 3000 and then straight away to 3900.

In my case, my house is a bit run down, so I managed to get it below market rate in 2018. It is a 5i corner unit 1300 sqft house. The paint job and tiles and kitchen and bathrooms were okay condition. It is a 1996 TOP HDB. So I negotiated well and got it for $1800 when nearby houses were going for $2300. Then from $1800 after 3.5 years, in 2021 I again negotiated well and got it for $2300. Now in 2023, I again managed to negotiate directly with the owner for $3000. But then the agent came in the middle and screwed up the whole thing. The agent got scared that he will be cut off and won't get the agent fee. So he told the landlord that he is stupid to rent it to me for $3000 and he could easily get $4000. Which is BS. Then the agent offered me $3500. Initially under pressure I agreed. Then I looked around. Most 3 bedroom houses are $4000. But this time there are tonnes of houses available.

Here is the golden rule in the rental market. It is all about how much fomo the agent can create by bringing a horde of people to view the house. But this time, most expats in the low end have sent their family out of SG or moved out themselves. So the demand has just collapsed.

Now I told the agent $3300, or I will vacate. Agent came back with $3400. I stuck with the same figure. I told him I will move to a 2 bedder house for $3000, unless I can renew the current house for $3300.

So now we are playing the who blinks first game.

Thank you for your comments bro.
Yes it’s the agents who are also trying to influence the owners actually, the same is in my case.
That’s why I mentioned that greed is a real thing.
Yesterday I informed them that I would not consider renewing if they increase the rent to 3900$.
The agent told me that she will discuss with the owner and come back to me for a 2 year rental period.
In the meantime I am already making arrangements to move to another place.

[Lisafuller]

I rented here for the first 10 years or so, and it was a renters market — if you added up just the mortgage interest, maintenance fees and property taxes — it was more than the rent, so it made sense to rent. Then everything changed, rents skyrocketed and it no longer made sense to rent. Had we known that was coming, we would have bought earlier — but better late than never. Mortgage rates have now become an issue… but the mortgage interest, maintenance fees and property taxes are still far lower than the rent would be on this place. The outstanding loan to market value is currently 0.32, so I am thankful for all those years of low interest rates and the appreciation in value — even the value has averaged a meager 3% increase per annum, that does not consider the leveraged aspect.

On a fully financed property, rent vs. interest/fees/taxes are usually much closer together. The advantage to buying is that after a decade plus the rent will usually go up and you have built equity. But this doesn't consider the opportunity cost of the down payment and all the monthly principal payments. See what the down payment, BSD, and all the monthly principal payments would be worth had they been invested in S27. You would also need to make some adjustment for the difference paid in rent - the above mentioned costs.

But that's the real calculation. Often, I find that people overestimate the value of leverage. It's great in the initial years, but over time it's not even close to a 4x multiplier (assuming 75% financing).

Of course, there are other pros and cons to both renting and owning. For one, buying allows you to both invest in and enjoy living in a particular property. Often, if you only spent the above mentioned costs on rent, you would need to live in a cheaper location. So even if one set of numbers is lower than the other, there may have been additional utility associated with one of them.

Anyways, the cost of holding property has gone up over the last couple of years. Everyone can decide whether they think this is a factor driving housing costs (both owned and rented) or not.

Very well put. In terms of advantage of renting, we usually outgrow the property in about 5 years. Either we feel bored of it and would like to try something new or life events happen. Job changes, school changes. Renting gives you the flexibility to move around. Financially also we don't spend a lot to do up a rented property, but when we buy we somehow like to do it up nicely and keep spending on furniture etc. Renting feels a bit of no strings attached especially in a place if you don't have residency, you don't want to make any attachments with property etc.

So for expats I just feel renting is the best.

Agree, it's low commitment, less responsibility, and you get a change of scenery every couple years.

[Lisafuller]

It's a no brainer I feel - expats are better off renting.

Especially if the company is footing the bill

[Lisafuller]

Very well put. In terms of advantage of renting, we usually outgrow the property in about 5 years. Either we feel bored of it and would like to try something new or life events happen. Job changes, school changes. Renting gives you the flexibility to move around. Financially also we don't spend a lot to do up a rented property, but when we buy we somehow like to do it up nicely and keep spending on furniture etc. Renting feels a bit of no strings attached especially in a place if you don't have residency, you don't want to make any attachments with property etc.

So for expats I just feel renting is the best.

It's not just expats. On some days, people here say property is a low returning asset, inferior to other options. On another day, somehow being a property owner magically became so much more attractive.

Here's some simple math. A dollar put in a property a decade plus ago at 3.5% is worth ~$1.5 today. With 75% initial debt, your equity went from $0.25 to $0.75. The US stock market from a decade plus ago is up 3x - 4x, so your downpayment saved went from $0.25 to $0.75-$1.00 range. In this example, all of the principal payments reduced debt with zero return. Alternatively, all of the forgone principal payments could have earned something, likely doubling on average.

I think during any period under 10 years you can get wild swings in either of these markets that makes your decision look good or terrible. Over 20-30 years (length of a mortgage), the numbers are likely to be a lot closer together than most people think (even after paying more for rent in the second or third decade). In one case, you have a liquid portfolio that can be used to consume anything anywhere. In the other case, you own an aging property that is getting harder to sell (granted, some locations are better than others and freehold land will always retain some value here).

That being said, there are other pros to owning a home and most people will do so in their primary/long-term place of residence.

Seems like HDB is doing what they can to make the next batch of flats less profitable.

[Lisafuller]

The place I am renting used to be 2350$ before the Corona virus , and last year the owner raised the rent to 3000$, now for renewing the contract they are asking me for 3900$ …
So I don’t think this rent peaking stands correct in many cases..greed wont let it happen and there are enough chumps who will be ready to pay these inflated rents as the company is paying for them especially the westerners who come here on short stints

That's outrageous, but all too common nowadays. I'd look elsewhere...

[Lisafuller]

The place I am renting used to be 2350$ before the Corona virus , and last year the owner raised the rent to 3000$, now for renewing the contract they are asking me for 3900$ …
So I don’t think this rent peaking stands correct in many cases..greed wont let it happen and there are enough chumps who will be ready to pay these inflated rents as the company is paying for them especially the westerners who come here on short stints

Yeah, but this should be the peak. Don't lock in 2 years. Also if possible look around and forward the article to your landlord telling him rents are going down and you will move out unless he makes it 3500. It's absurd to go from 2350 to 3000 and then straight away to 3900.

In my case, my house is a bit run down, so I managed to get it below market rate in 2018. It is a 5i corner unit 1300 sqft house. The paint job and tiles and kitchen and bathrooms were okay condition. It is a 1996 TOP HDB. So I negotiated well and got it for $1800 when nearby houses were going for $2300. Then from $1800 after 3.5 years, in 2021 I again negotiated well and got it for $2300. Now in 2023, I again managed to negotiate directly with the owner for $3000. But then the agent came in the middle and screwed up the whole thing. The agent got scared that he will be cut off and won't get the agent fee. So he told the landlord that he is stupid to rent it to me for $3000 and he could easily get $4000. Which is BS. Then the agent offered me $3500. Initially under pressure I agreed. Then I looked around. Most 3 bedroom houses are $4000. But this time there are tonnes of houses available.

Here is the golden rule in the rental market. It is all about how much fomo the agent can create by bringing a horde of people to view the house. But this time, most expats in the low end have sent their family out of SG or moved out themselves. So the demand has just collapsed.

Now I told the agent $3300, or I will vacate. Agent came back with $3400. I stuck with the same figure. I told him I will move to a 2 bedder house for $3000, unless I can renew the current house for $3300.

So now we are playing the who blinks first game.

Hope this goes well for you... sounds just like poker!

Agents can be so greedy sometimes, though they are supposed to represent the LL's interests there is still a line.

[Lisafuller]

This may vary based on the age and financing of the unit, but for some of the newer units I doubt owners with leverage will be willing to let them sit idle for very long. When rates increased several percentage points, this flipped the composition of the mortgage payment from mostly principal to mostly interest (at least in the initial years). Hence, why waiting for a high rental rate is good (as an owner), you need to weigh this against the interest expense incurred while the unit is idle, as this cost is fully gone/non-recoverable.

The above is probably why some people thought renting was expensive, and it was in isolation, relatively speaking, but you still need to consider the opportunity cost of all the capital plowed into a unit.

thank you very much..
I renewed my contract last in end of November 2022, so the next renewal is 2023.
I just saw on a property website propertyforsale.com.sg that the rental in my building for my kind of unit 500-600sqft have recently rented for 3000$ in July 2023.

I don’t know why the owner of my unit is asking for 3900$,
Also similar units in my building are now being advertised on . for 3700-3900$
So maybe the owner saw that and trying to do the same.

I can understand the pricing decision on their end, if they're seeing others price their units so highly, they will be inclined to do the same so as not to lose out. That being said, all of this is meaningless if nobody is willing to pay their inflated prices.

[Lisafuller]

The place I am renting used to be 2350$ before the Corona virus , and last year the owner raised the rent to 3000$, now for renewing the contract they are asking me for 3900$ …
So I don’t think this rent peaking stands correct in many cases..greed wont let it happen and there are enough chumps who will be ready to pay these inflated rents as the company is paying for them especially the westerners who come here on short stints

Yeah, but this should be the peak. Don't lock in 2 years. Also if possible look around and forward the article to your landlord telling him rents are going down and you will move out unless he makes it 3500. It's absurd to go from 2350 to 3000 and then straight away to 3900.

In my case, my house is a bit run down, so I managed to get it below market rate in 2018. It is a 5i corner unit 1300 sqft house. The paint job and tiles and kitchen and bathrooms were okay condition. It is a 1996 TOP HDB. So I negotiated well and got it for $1800 when nearby houses were going for $2300. Then from $1800 after 3.5 years, in 2021 I again negotiated well and got it for $2300. Now in 2023, I again managed to negotiate directly with the owner for $3000. But then the agent came in the middle and screwed up the whole thing. The agent got scared that he will be cut off and won't get the agent fee. So he told the landlord that he is stupid to rent it to me for $3000 and he could easily get $4000. Which is BS. Then the agent offered me $3500. Initially under pressure I agreed. Then I looked around. Most 3 bedroom houses are $4000. But this time there are tonnes of houses available.

Here is the golden rule in the rental market. It is all about how much fomo the agent can create by bringing a horde of people to view the house. But this time, most expats in the low end have sent their family out of SG or moved out themselves. So the demand has just collapsed.

Now I told the agent $3300, or I will vacate. Agent came back with $3400. I stuck with the same figure. I told him I will move to a 2 bedder house for $3000, unless I can renew the current house for $3300.

So now we are playing the who blinks first game.

Thank you for your comments bro.
Yes it’s the agents who are also trying to influence the owners actually, the same is in my case.
That’s why I mentioned that greed is a real thing.
Yesterday I informed them that I would not consider renewing if they increase the rent to 3900$.
The agent told me that she will discuss with the owner and come back to me for a 2 year rental period.
In the meantime I am already making arrangements to move to another place.

How much is the other unit you're planning on moving to? If the agent comes back to you with a satisfactory offer will you still move?

[x9200]

The place I am renting used to be 2350$ before the Corona virus , and last year the owner raised the rent to 3000$, now for renewing the contract they are asking me for 3900$ …
So I don’t think this rent peaking stands correct in many cases..greed wont let it happen and there are enough chumps who will be ready to pay these inflated rents as the company is paying for them especially the westerners who come here on short stints

That's outrageous, but all too common nowadays. I'd look elsewhere...

Elsewhere is unfortunately the same plus the moving out/in costs. We experienced similar hike and I can not even call it unfair because this is the price the flats are now being rented for in my condo.

[malcontent]

Back when I was renting, I came across a lot of jokers who were hoping to get lucky and asking 40-50% above market rent. Don’t waste your time with these jokers, they are not serious about renting the unit and don’t deserve the time of day. I still remember the last joker I encountered, I told him straight to his face that the price he was asking is way too high and I told him what the market rent was for his place. He didn’t care, so I immediately left. There is no explanation or logic for these kinds of people, other than one — they are hoping to get lucky and are willing to wait long-long for a sucker to come along… if that ever happens. Even if this kind of landlord comes down to market level, you don’t want to be the one renting from them. They are just opportunists who will always look for a way to screw you.