Rents are peaking!

[NYY1]

Dang something shocking happened yesterday, the owner came back to me and has
offered 2700$ for renewing my rental for 2 years.. and I am taking it
you was right bro, the rental market is cooling down.
Is it because lot of expats are leaving

Congrats and good news for you!

Hope more people will share what they are seeing; I am definitely interested to see how things shake out, and from here there seems to be a variety of situations in the market.

[Lisafuller]

I think each micro market has its own dynamics. I am mainly looking at HDBs. condos are now well beyond my reach.

You can take a look at D22 district ads in the popular real estate website. In 2021, I hardly saw any units vacant, but now I see a lot and hardly anybody looking for them. Just 3 Indian families bumping into each other. The Malaysians have all long moved to JB. So it kind of makes sense.

Actually.... I was tempted to write it earlier, you should also look for condos but I was under impression you would rather save a few dollars than upgrade... I am renting paying very similar figures you mentioned here, 4k for 3BR, ca 110sm condo. The difference (in average) is 5-10% assuming bringing the asking price down. It is really funny to see that gap so small.

Well, in my area D22, most condos are brand new and the pricing is insane. A 500 sqft studio is 4k, and the kitchen is totally non functional. More like you can cook Maggi there. 2 bedder condo's in my area are around 5k.

Also, my biggest priority is to be close to my daughter's school. It should ideally be a direct bus ride less than 30mins. My current house is 15mins bus ride for my daughter. This saving in time is a huge huge factor than any condo amenities, for us. We are very practical people, just need a simple neat and clean house with a decent size kitchen and living room. Ideal house size for us is 800sqft 3A HDB. Unfortunately, those are very rare. Usually the HDB are tiny 700sqft or you need to go for 4 room HDB just for size.

My current sweet spot of rent I am willing to pay is 3k. Although if I can renew my current house I can go to 3.3k max. So it is not saving a few dollars over a condo, it is several 100 dollars.

Just curious, does your daughter's school not offer school bus services? If so, it wouldn't really matter where you lived.

[Lisafuller]

Actually.... I was tempted to write it earlier, you should also look for condos but I was under impression you would rather save a few dollars than upgrade... I am renting paying very similar figures you mentioned here, 4k for 3BR, ca 110sm condo. The difference (in average) is 5-10% assuming bringing the asking price down. It is really funny to see that gap so small.

Actually there are quite a few condos with rentals of less than 4K. Obviously location tends to be quite inaccessible/far from CBD but this is to be expected.

It's nothing ulu-ulu, IIRC we are neighbors. Bukit Batok East. But it is not close to MRT. URA transactions for last 3 months for similar size are something like 3700-5300; 3900-4600 ignoring extrema.

Not exactly neighbors, but pretty close! West side best side

$3700 is rare imo.

[Lisafuller]

Actually.... I was tempted to write it earlier, you should also look for condos but I was under impression you would rather save a few dollars than upgrade... I am renting paying very similar figures you mentioned here, 4k for 3BR, ca 110sm condo. The difference (in average) is 5-10% assuming bringing the asking price down. It is really funny to see that gap so small.

Just curious, how old is your building and what's being built around it (if anything)? 3BR, 1,200 Sq ft wouldn't be new but not ancient either. Guessing 20xx build (perhaps it was pretty new when you moved in).

The ones I've seen really flatline this year are a) high absolute dollar rent but old buildings - seems like at some threshold people that can pay that much are sensitive to the condition, and b) smaller units where there is new competition coming very soon (commoditized box that is no longer the newest).

The indices have still been ticking up this year, which matches what you see. However, I have wondered if there is some bias upward from the inclusion of new units though.

2005. Was not that new but nothing to complain about. It does not appear/feel like an old place but I couId be already desensitized living there that long.

I love older developments, the units tend to be much larger, and the estate is usually far more spacious and convenient as businesses have long moved into the area to service residents.

[Lisafuller]

Just curious, how old is your building and what's being built around it (if anything)? 3BR, 1,200 Sq ft wouldn't be new but not ancient either. Guessing 20xx build (perhaps it was pretty new when you moved in).

The ones I've seen really flatline this year are a) high absolute dollar rent but old buildings - seems like at some threshold people that can pay that much are sensitive to the condition, and b) smaller units where there is new competition coming very soon (commoditized box that is no longer the newest).

The indices have still been ticking up this year, which matches what you see. However, I have wondered if there is some bias upward from the inclusion of new units though.

2005. Was not that new but nothing to complain about. It does not appear/feel like an old place but I couId be already desensitized living there that long.

Understand and thanks for the commentary. FYI, I looked at one other development I know where most units are pretty much the same. Outlying area but very close proximity to MRT and not the newest but also not the oldest there (20xx TOP). If I just do a scatter plot and line of best fit, Nov 22 to July 23 shows an upward trend. Interestingly, rents had stalled out Jan - May of this year but are up about 10% in June and July. Also, the spread between high and low per month is narrowing a lot.

Bottom line, I guess it all depends...

On accessibility, when I consider a home that's near MRT, but very far from everything compared to a home that's in a good location but far from public transport, I am inclined to prefer the latter. Obviously, this is because I drive, but even if I didn't, it seems so exhausting and inconvenient to be so far away from all the action, even if you have a means of getting there.

[Lisafuller]

2005. Was not that new but nothing to complain about. It does not appear/feel like an old place but I couId be already desensitized living there that long.

Understand and thanks for the commentary. FYI, I looked at one other development I know where most units are pretty much the same. Outlying area but very close proximity to MRT and not the newest but also not the oldest there (20xx TOP). If I just do a scatter plot and line of best fit, Nov 22 to July 23 shows an upward trend. Interestingly, rents had stalled out Jan - May of this year but are up about 10% in June and July. Also, the spread between high and low per month is narrowing a lot.

Bottom line, I guess it all depends...

The demand supply is very nuanced very each micro market. For example in my area, the biggest draw is that there is an Indian intl school nearby. Mostly Indians love this area. But then the school term starts in march. So now in October, the demand is very thin. Only 3 Indians are looking for the same houses in our area, lol. So the owners must be smart enough to time the leases so that they start/end in March. Our lease originally started in march but it was a 1 and 1/2 year lease as previously HDB allowed only max 1 and half years. But subsequent renewals my lease is always 2 years renewal. So I have an upper hand right now in terms demand and supply.

Don't parents live there year round? Why does it matter what time of year it is?

[Lisafuller]

One thing to keep in mind, over the last 10 years, rents (at least indices) are up about 3% per year, hardly a glaring amount (people forget there was a supply glut in 2013-2018). That may be peak-to-peak, but even going back to 2007 the CAGR is a little less than 4%.

Basically, due to the lead times and inability to reduce supply, this is a market that is never in balance (one side always has the upper hand). After 2008 and 2013, rents fall 20% - 25%, although the rate of decline was quite different in the two cases. Given the 50%+ increase, that may sound like an easy number to see again, but I'm not so sure.

Housing in Singapore should have zero inflation. It is a very controlled asset. Also demand and supply is everything. I want to know how much the population has increased since 2013? From the MoM stats, foreigners population has been very stable and flat in Singapore over the past decade, yet several HDBs and condos have been built and MOP have been completed. So there is no way to justify the increase over the COVID period. I think prices will go back right to where they were in the next couple of years. As several more condos and HDBs are going to be completed over next few years and there is no appetite to increase foreigners inflow into Singapore.

We were at 5.4 and now are just over 6. So, a pretty significant increase. That being said, the housing inflation is unjustifiable.

[Lisafuller]

One thing to keep in mind, over the last 10 years, rents (at least indices) are up about 3% per year, hardly a glaring amount (people forget there was a supply glut in 2013-2018). That may be peak-to-peak, but even going back to 2007 the CAGR is a little less than 4%.

Basically, due to the lead times and inability to reduce supply, this is a market that is never in balance (one side always has the upper hand). After 2008 and 2013, rents fall 20% - 25%, although the rate of decline was quite different in the two cases. Given the 50%+ increase, that may sound like an easy number to see again, but I'm not so sure.

Housing in Singapore should have zero inflation. It is a very controlled asset. Also demand and supply is everything. I want to know how much the population has increased since 2013? From the MoM stats, foreigners population has been very stable and flat in Singapore over the past decade, yet several HDBs and condos have been built and MOP have been completed. So there is no way to justify the increase over the COVID period. I think prices will go back right to where they were in the next couple of years. As several more condos and HDBs are going to be completed over next few years and there is no appetite to increase foreigners inflow into Singapore.

Search Population in Brief. The total resident population (SC + PR) has increased from 3.845 million to 4.073 million. EP is basically flat, as you note, and SP is up 17k. Not sure on the housing stock since then (note, all of these figures are from 2013 to 2022). Probably also need to consider wage growth. There are also kids that no longer want to live at home; this is driving demand for housing units without changing the population figures.

Also have to think about the silver tsunami - there a likely a significant number of children of aged parents who have had their parents move in with them to caretake. This would decrease demand.

[Lisafuller]

One thing to keep in mind, over the last 10 years, rents (at least indices) are up about 3% per year, hardly a glaring amount (people forget there was a supply glut in 2013-2018). That may be peak-to-peak, but even going back to 2007 the CAGR is a little less than 4%.

Basically, due to the lead times and inability to reduce supply, this is a market that is never in balance (one side always has the upper hand). After 2008 and 2013, rents fall 20% - 25%, although the rate of decline was quite different in the two cases. Given the 50%+ increase, that may sound like an easy number to see again, but I'm not so sure.

Housing in Singapore should have zero inflation. It is a very controlled asset. Also demand and supply is everything. I want to know how much the population has increased since 2013? From the MoM stats, foreigners population has been very stable and flat in Singapore over the past decade, yet several HDBs and condos have been built and MOP have been completed. So there is no way to justify the increase over the COVID period. I think prices will go back right to where they were in the next couple of years. As several more condos and HDBs are going to be completed over next few years and there is no appetite to increase foreigners inflow into Singapore.

Dang something shocking happened yesterday, the owner came back to me and has
offered 2700$ for renewing my rental for 2 years.. and I am taking it
you was right bro, the rental market is cooling down.
Is it because lot of expats are leaving

Wow, I'm very surprised. To think just a couple weeks ago he was trying to overcharge you by so much. Glad this has worked out for you.

[Lisafuller]

Housing in Singapore should have zero inflation. It is a very controlled asset. Also demand and supply is everything. I want to know how much the population has increased since 2013? From the MoM stats, foreigners population has been very stable and flat in Singapore over the past decade, yet several HDBs and condos have been built and MOP have been completed. So there is no way to justify the increase over the COVID period. I think prices will go back right to where they were in the next couple of years. As several more condos and HDBs are going to be completed over next few years and there is no appetite to increase foreigners inflow into Singapore.

Dang something shocking happened yesterday, the owner came back to me and has
offered 2700$ for renewing my rental for 2 years.. and I am taking it
you was right bro, the rental market is cooling down.
Is it because lot of expats are leaving

Wow! So instead of increasing your rent by $900, he cut your rent by $300? That's beyond what even what I imagined, lol. Congratulations! Rent is the biggest expense and if you want to save money in Singapore, you have to get the rental cost under control.

Perhaps something like this will happen to you too, WD40!

[NYY1]

Also have to think about the silver tsunami - there a likely a significant number of children of aged parents who have had their parents move in with them to caretake. This would decrease demand.

True, I guess some units become available before the people actually fall out of the population count (that is coming but I think it's still a bit away).

There are a lot of small changes that all add up, on the margin. I think the biggest one reversing right now is the newly delivered units (those people no longer need to rent and some new units are up for rent). Net impact is still TBD.

[Lisafuller]

Will have to wait and see, we all more or less know what the factors are, but the impacts of each remains to be seen.

[truthhurts1]

Housing in Singapore should have zero inflation. It is a very controlled asset. Also demand and supply is everything. I want to know how much the population has increased since 2013? From the MoM stats, foreigners population has been very stable and flat in Singapore over the past decade, yet several HDBs and condos have been built and MOP have been completed. So there is no way to justify the increase over the COVID period. I think prices will go back right to where they were in the next couple of years. As several more condos and HDBs are going to be completed over next few years and there is no appetite to increase foreigners inflow into Singapore.

Dang something shocking happened yesterday, the owner came back to me and has
offered 2700$ for renewing my rental for 2 years.. and I am taking it
you was right bro, the rental market is cooling down.
Is it because lot of expats are leaving

Wow, I'm very surprised. To think just a couple weeks ago he was trying to overcharge you by so much. Glad this has worked out for you.

Yes I am shocked too..
Maybe the reason is that I have been in the same unit for almost 10 years now.
Even then I didnt expect that they will reduce the rental by 200-300$.
I still don’t know what’s happening but I am pretty happy that this worked out well

[truthhurts1]

Dang something shocking happened yesterday, the owner came back to me and has
offered 2700$ for renewing my rental for 2 years.. and I am taking it
you was right bro, the rental market is cooling down.
Is it because lot of expats are leaving

Congrats and good news for you!

Hope more people will share what they are seeing; I am definitely interested to see how things shake out, and from here there seems to be a variety of situations in the market.

Yes sir thank you very much

[malcontent]

Maybe the LL thought he had a live fish on his hook that would pay more, but the fish got away.

Here is what happened to me once. I was buying an empty lot (property) in the US. I had been trying to get the guy to lower the price for almost 5 years… eventually I just offered 33% below the asking price - take it or leave it. At first he rejected the offer and stuck to his guns, but then a few days later he called and agreed to my price. Turned out the person he thought he would be able to sell it to at the higher price had died!