Every quarter, The Urban Redevelopment Authority (URA) and The Housing & Development Board (HDB) releases a comprehensive database of price indices and sales volume for the private and public rental housing segments. Ohmyhome analyses this huge chunk of data and picks out the most relevant points and trends for readers.
Overall rental prices increased from 2.6% in 4Q2021 to 4.2% in 1Q2022. The increase in rental prices was due to an improving market sentiment, which was bolstered by the easing of border control measures.
And with the existing property cooling measures in place, purchasing a home in Singapore is becoming more costly for foreigners. Hence, foreigners are diverting the interest towards the rental market, as they might feel that they are better off renting a unit instead of buying.
Another reason is the strengthening of occupancy rates. Occupancy rates have remained high and healthy across all the market segments with OCR reaching 96.4%, RCR at 93.9% and CCR at 91.9% in 1Q2022. The limited supply in the pipeline has contributed to the rise in rental prices.
With the increasing interest rates and the recent hike in property taxes it is likely that landlords may pass on the cost in the form of a higher rent.
HDB Rental Volume Dipped in 1Q22
On the other hand, the number of approved rental applications for HDB flats fell to 10,189 in 1Q2022. This was a 3.4% decrease from the previous quarter, when there were a total of 10,554 approved rental applications.
As the relaxation of the border control measures only occurred in the later part of the first quarter of 2022, the impact has not fully translated into the rental demand yet. It is likely we will see growth in the coming months.
Positive Rental Outlook for Private and Public Housing
We expect rental demand to further strengthen for both the public and private housing segments for the rest of the year.
As monthly visitor arrivals are on the rise as a result of the Vaccinated Travel Lanes (VTL) and the easing of border control measures. We can expect more foreigners to return to Singapore.
And with the allowance of more workers to return to the office, It is likely foreign workers will be looking for accommodation that is near their offices as well.
Demand will also be driven by those who are looking for interim alternatives, while waiting for their properties to be completed. This is especially true when a newly married couple wishes to live together while waiting for the units to be completed.
If the en bloc sales start to pick up, displaced tenants will be looking for short term accommodation while waiting for their replacement homes as well.
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