The harsh rent increases have affected many – for many expat families, it’s one of the major reasons for leaving Singapore. If your lease is up for renewal in 2023, you’ll be wondering if rental prices will be coming down and how to renegotiate with your landlord
Is your condo or landed property lease up for renewal and are you stressed out about those crazy rent hikes (we are hearing stories of Singapore rent increases of 50-300%!)? We chat with Nadia Ederer, fellow mama and realtor, to find out if the rental prices in Singapore are expected to come down any time soon, plus don’t miss her tips on how to navigate the rental market in 2023.
As we find ourselves in the second quarter of 2023, many cannot believe that we are still grappling with an even more heated rental market in Singapore. According to the Urban Redevelopment Authority’s rental index, private residential property prices took a crazy jump in 2022, rising by 29.7% year-on-year – a leap unseen since 2007!
While a high demand and a low supply have certainly played a crucial role in pushing these prices upwards, it has been pretty shocking for me to have personally observed that some landlords have not hesitated to leverage this situation to their advantage, sometimes asking for double, and yes, believe me, even triple the current rent from existing tenants!
Rental hike may be confined to the first six months of 2023
Alan Cheong, the executive director of research and consultancy at Savills Singapore, has some potentially hopeful news, though. He has suggested that most of the rental hike we can expect this year will be confined to the first six months of 2023 – which, let’s face it, we’ve already experienced. And, there’s a silver lining! Rents are expected to level off and possibly even soften in the latter half of the year. This can give hope to those whose leases are ending in the later part of 2023!
The core factor underpinning these relentless rent hikes remains an imbalance between supply and demand, a situation most predominant in central areas. This situation is further intensified by an influx of multinational corporations – spanning sectors from manufacturing and banking to finance and technology – establishing their offices in Singapore and driving up demand even further.
Tips for Renters in Singapore in 2023
Sadly though, this steady climb in rent prices has come to a point where it’s posing a significant threat to affordability, cutting into personal savings and spending. So, what can tenants do in this complex rental landscape? Here are some strategies:
1. Consider Moving
Moving seems like the most obvious solution of course. When faced with an unreasonable rental increase, it does seem like the only choice. However, do prepare yourself for a reality check, because in order to keep your rental costs down, you might have to adjust your expectations in terms of the size of your home, the convenience of its location, or even its age and condition. If this sounds unpalatable, remember this could just be a temporary measure. Once the rental market stabilises, you might be able to move back to a location you prefer. Research extensively, lean on the expertise of a reputable real estate agent, and be open to suburban neighbourhoods or even the heartlands!
Read More: Best Movers in Singapore for Local and International Relocation
2. Negotiate Your Way Through
If you’re willing to shell out a bit more to keep your current place, yet find the new asking price a little (or a lot!) out of reach, roll up those sleeves and get ready to negotiate. There is absolutely no harm in trying! Remind landlords about peaking rental prices. An experienced agent representing the landlord might end up agreeing with you that rents will likely level off or even recede. Some landlords may even value retaining a good tenant over the hassle of re-advertising and dealing with potential vacancies. It’s a delicate dance, so approach it with respect, factual arguments, and patience. Good luck!
3. Consider Buying Property
When rents skyrocket, it might be time to consider investing in property. Instead of contributing to someone else’s equity each month, why not build your own? However, this option comes with a caution.
- While everyone (Singaporeans, PRs or Foreigners) must pay a Buyer’s Stamp Duty when buying property in Singapore, foreigners face an Additional Buyer Stamp Duty (ABSD) of up to 60%, which might make this option less viable.
- For Singapore PR holders, the ABSD is a more manageable at just 5%. So if you’re a PR holder, this could be a very interesting option for you to consider.
- Interestingly, citizens of the USA or citizens/PRs of the Iceland, Liechtenstein, Norway, or Switzerland are totally exempt from ABSD! For those fortunate enough to qualify for this exemption, owning a property, even if smaller than your current rental, could mean contributing to your personal wealth rather than a landlord’s.
In these trying times, patience, informed decision-making, and a dash of boldness are your best allies in navigating this challenging rental market. Remember, this is a season and like all seasons, it too will pass.