Rent increase madness

[T+D]

Its been a while since I last spotted someone commenting on the rent increase madness even though it continues. After a month of searching and despite this supposedly being the quietest time to find a place I still havent been able to reconcile the rents being demanded for most places.

There seems to be an expectation on the part of the landlords that in January singapore will be flooded with expats with massive housing allowances - but I dont think this is the case at these prices however I have noticed most agents using panic tactics to try to get punters to pay more ahead of this rush.

When planning to come to singapore I was told this site had a good range of properties but some of the prices were inflated but my experience is that most landlords are not willing to negotiate much even if they have had an empty property for up to a month.

Am I using the wrong agents - ie does the price depend on whether you are introduced as an expat or not? I dont think these prices are sustainable even if there is an increase in expats in Jan - does anyone else see a crash coming or is it likely these prices are here to stay?

In many cases tenants are being turfed out because they are not willing to pay sometimes double the original rent, however I see in most cases these properties then going on the market at an even more inflated rent - my advice to those expats arriving in the new year is dont believe the hype and negotiate hard otherwise we will never see the correction that is well overdue!

[sundaymorningstaple]

Take it from someone who has lived through 4 recession/booms here. The market hasn't topped out yet. It's only getting near the pre '97 Asian Financial Meltdown levels. While the dollar figures may be close to the same, the wages levels are higher now therefore the percentages are still down.

A large percentage of the older condos are just reaching 10-11 years old and these are the one's that are seemingly overpriced. One has to remember that most of the investors who bought just before the meltdown have been in negative equity for years. They are now trying their damnedest to catch up. The new development charges have slowed it down a wee bit and the rampup of HDB construction for an additional 10,000 units will help some but at the end of the day, with the IR's and new Refinery Complex, there will be a large demand for sometime yet. I reckon it won't stop until about 6 months after the IR's are open for business. The current inflation for the month of November was 4.2% and this is a 25 year high.

[T+D]

I follow your reasoning, but dont you think there is a limit.

For example - a place renting for 6k in newton for example for the last two years is now demanding 12k or thereabouts - after negotiation (notwithstanding my earlier comment) say you can get it for 10k. Thats 120K pa potentially for 3-5 year old bathrooms. Which expat wouldnt rather add the allowance to their salary and move somewhere like serangoon where rents are less expensive (but still inflated).

Also I do think the banks are hurting - lets be honest they dont like sending out high rollers unless they have to but rather prefer to send nubie execs who have lower bases and less expensive tastes - i work for a bank and i've found most of them are now playing hardball on the rental allowance looking for the individual to top up - again there has got be a limit especially if the quality (fixtures and furnishings) is not there. There is a bit of a sting when you negotiate a higher pay package only to have to pay it to your landlord!

I live in hope!

[EADG]

you have more reason for hope than I, also at a bank, but neither I nor anyone I work with get such allowances

come January these owners will get a wakeup call when the housing market is going to take a hit as many of us find ourselves suddenly but not surprisingly out of work, our EPs get yanked and we go back to from where we came

not sure if the owners make out with the diplomatic clause called, but there may be soon many empty apartments, I know some MNCs are reconsidering moving people from HK & Japan to Singapore because there's no longer a cost benefit - the increase in cost is not factored into salaries which are based on a couple of years ago's rates, so people are opting out of the move

got my PEP as insurance but that's only good for 6 months

Also I do think the banks are hurting... nubie execs who have lower bases and less expensive tastes - i work for a bank and i've found most of them are now playing hardball on the rental allowance...I live in hope!

[keepitreal]

Finally we have some investment bankers online like myself to comment on this overheated market. I have to agree that expat packages are now becoming more scarce with expats, especially with the larger firms but in the shipping/energy space they are still rife!

Unfortunately the global economy is in for a big shock next year and Singapore my freinds will not be immune. Only a month or so ago the MM (minsters mentor) himself advised Singaporean's to brace themsleves and diversify their assets because of the forthcoming global meltdown.

The global credit crunch is just a tip of the iceberg. Rising energy prices have fuelled rising inflation across the globe and Singapore have seen record inflation increases most recently. All of this paints a very grim picture I'm afraid and the continued troubles in the middle east only add more petrol to the fire.

This location was good location for companies to re-locate up until a year or two ago but now costs are rising, the heat is on to find even cheaper locations throughout Asia, with India being at the top. Office space in the CBD is at a premium and real estate prices have seen record increases to - lucky for those that agreed long term deals a year or so ago but for new business coming in that need to be in the CBD they'll have to dig deep to secure their space and figure out whether this is still a cost effective location for them.

We cannot blame landlords entirely for the overheated market, they are seeking guidance from their agents on what the asking price should be and when to accept an offer. OK, you;ll get some landlords that will be very savy and will spend time researching the market but the majority of this crisis is down to the agents.

I viewed an apartment on my condo nearly 4 months ago which was too small for us and a little over priced - I told them that too. It's still on the market today, cos the landlord would rather wait to get the asking price he wants and not have anyone in there! Sounds crazy right? But he probably bought the place for peanuts 2.5yrs back so can afford to do so!

We live in a large condo and when we moved in 4 months back there was probably about 95% locals versus 5% expats. Now when I look around at the weekends it must be closer to 70-30 - that's a big increase in just 4 months. My philiosophy with this is that the place was finished 2.5 years ago and a lot of the locals living here actually owned their apartments. Some have cashed in and sold up where as others have moved out into a HDB and are renting condo's to suckers like us and making 3-4k over their mortgage each month. Clever, eh? No need to work then as that's a good salary for a Singaporean.

The trouble is though, eventually more and more will do this until we have an over supply in the market. Those mortgage payments will start hurting and eventually they will be forced to lower their asking prices.

Now, this is likely to take 6months to a year so if your just about to negotiate a new lease, might be worth taking a one year contract.....

[T+D]

Thanks EADG and keep it real - even if we cant beat them its some comfort to know I'm not the only one who thinks that the golden goose has been pushed to far!

I think most landlords know that things are losing steam though which has meant I've found it pretty much impossible to negotiate a one year deal at a reasonable price - I suspect the only option is to camp out at a Serviced Apartment for a few months, but this whole situation has the feel of the UK property boom to it where things looked overpriced five years ago and still managed to go north from there! Greed can overcome many economic shocks!

[ScoobyDoes]

The global credit crunch is just a tip of the iceberg. Rising energy prices have fuelled rising inflation across the globe and Singapore have seen record inflation increases most recently. All of this paints a very grim picture I'm afraid and the continued troubles in the middle east only add more petrol to the fire.

And with the radio telling us this morning that SP-Power are to implement a ~6% increase in electricity prices in the first 1/4 of next year the pressures just keep coming.

Fuel prices will continue to go up, subsidies for medical is being removed or lowered for all except citizens.

[EADG]

you're right T+D and I think a lot of people still feeling that bloodlust feeding frenzy of rental increases are going to be humbled PDQ

this reminds me of a point I try to drive to landlords and RE agents - a lot of or all of them assume that a lot of or all of us get our housing paid for, that we're all fat cats rolling in the dough, and that we have a lot of expendable income

when I explain to them the contrary, they always come off surprised to learn the realities of the current "expat" scene

I think we can all help by educating these people (they are people, right?)- maybe, just maybe then they will learn to be a just little compassionate

...but I'm not expecting much

Scooby, your post troubles me - are those done deals or speculation?

I think most landlords know that things are losing steam though which has meant I've found it pretty much impossible to negotiate a one year deal at a reasonable price - I suspect the only option is to camp out at a Serviced Apartment for a few months, but this whole situation has the feel of the UK property boom to it where things looked overpriced five years ago and still managed to go north from there! Greed can overcome many economic shocks!

[sundaymorningstaple]

Scooby, your post troubles me - are those done deals or speculation?

They are done deals. The coming rise in Electricity tariffs was in the papers and the medical subsidies have already been cut drastically. After paying heaps of taxes here over the past quarter of a century, now that I'm old enough to start worrying about health issues, they are taking my subsidies away. This country sucks big green weenies! Had I known they were so childish, I would have talked my son out of NS like all the rest!

[Asian_Geekette]

Ha! Yesterday I received an email from my land lady telling me that she's not going to rent out the room where I'm staying in. Basically she wants me to move to a smaller room (700 SGD and no attached bathroom and very small) or upgrade to a master's bedroom (1200 with an attached bathroom but not a big bedroom). She said she'd be renovating my current room and she'd be staying there with her husband. Landlords right now are becoming more creative in breaking the contracts (mine's open ended) so they can get more money. I wonder whether this rental madness will end in a year or so...

Anyway, I'd be hunting for another place to stay now. The landlady lives on the same HDB unit as I do but she didn't have the face to talk to me about it -- preferring to send me an email which basically doesn't give me any choice but to find a new place.

[pooiyin]

Hi everybody,

I am new to singapore. But i encountered the same problem. The rental is so high and now my landlord may take back the place. Guess she want to increase the rental. I am also hunting 4 a place stay.

[ScoobyDoes]

Scooby, your post troubles me - are those done deals or speculation?

SMS confirmed it and has the right to be mad about it, i know i would be.

Combine electricity rises, medical cost rises, further expected petrol price rises, taxi fare increases and food prices increasing (but all over the world) then add to the vast rentals in the last year and this place has virtually already priced itself out of the market.

I moved here from KL earlier this year but i can easily see myself shifting back again to avoid this level of expense. There are problems in Malaysia for sure, but there are problems everywhere and prvided precautions are taking it's no riskier there than most other major cities worldwide. I believe a lot of companies are coming to similar conclusions.

[hedgehunter]

I'm starting to lose hope too.

My lease is up in August and given the current conditions, I'll be heading back to the UK then after 2 years. Like many of my expat friends here, none of us are on packages. Financially it cannot work for me anymore after August as I would be looking to live on $200 per week after all expenses are paid. I'm also not prepared to downgrade and live in a HDB - call me a snob, but I grew up in a council house in the UK and I'm not going back down that road even though I'm sure a lot of the HDB developements here are perfectly fine. I like nice facilities, surroundings, contemporary, quiet and clean living. I doubt I'll get all of this in a HDB.

For sure this is a great place to live and there are so many benefits like the weather, shopping, food and safe environment. But does anyone else think that it get's a bit boring after a couple of years here?

[Jeppo]

I'm starting to lose hope too.

I'm also not prepared to downgrade and live in a HDB - call me a snob, but I grew up in a council house in the UK and I'm not going back down that road even though I'm sure a lot of the HDB developements here are perfectly fine. I like nice facilities, surroundings, contemporary, quiet and clean living. I doubt I'll get all of this in a HDB.

Okay, you're a snob

From your post you've obviously never set foot in a hdb estate, and have made assumptions based merely on a name. Before making judgements at least visit some so you can claim to know what you're talking about.

[sundaymorningstaple]

For sure this is a great place to live and there are so many benefits like the weather, shopping, food and safe environment. But does anyone else think that it get's a bit boring after a couple of years here?

Yup! Try 2 and a half decades!