Would Singapore Private Apartment Rental Prices Fall Further?
The rental prices for the last quarter of 2008 had already dropped more than 5%. We expect the rental prices for the 1st quarter to drop as well given that most asking price from various condos had already dropped over the period of January and February. Owners and agents have lowered the asking price in order to have an opportunity to show potential prospects to view the apartments.
Since 2008 3rd quarters, according to Knight Frank and URA report, island wide rentals had since fell for the first time ever since its rise. As more expatriates are leaving the country due to companies cost cutting or their budget for expatriates’ homes decrease, the demand for rentals have decreased over the time. Unemployment rates would also impact the whole economy as well, which would affect the over aggregate demand for Singapore.
Now, the tenants hold the bargaining power if they can hold on longer as owners would lose more if they choose not to take a lower rental price. However, this does not apply to HDB rental as the demand for HDB rentals are still increasing.
As the rental price drops, the investments many people derive from property rentals decrease as well. To many, rentals investment of 3% can consider to be lucky in this financial crisis.
As the property prices drop to the level before 2004, it can be a good time for many of us to start to invest in the property. At the end of December 2008, rental prices had mostly return to the level of March to June 2007.
Would rental prices drop below 2006 rental prices?
With the increase of population in Singapore, it is difficult to predict that the rental price would drop too much. However, there are several reasons that rental price can drop below 2006.
- More private apartments are being rent out. It can be because owners are facing cash flow problem and renting out their homes would increase their cash flow. And as more owners start to do so, there would be an increase supply of private property for rentals. As a result, the property rental prices would decrease as tenants have more choices to choose from whereas landlords and agents have to lower their rental prices in order to attract the tenants.
- The population in Singapore decreases when foreign workers return to their home country or when expatriates are sent back to their homes due to the decrease in revenues of companies.
- Developers are renting out their new developments to increase their cash flow. With the increase in the supply of houses for rentals, property rental prices would drop too.
- If more people are expecting the rental prices to drop and delay their option of renting a new house, then the overall demand for rentals would drop too. A few tenants who are looking for new houses to move have been expecting the prices to fall again and have been waiting longer for the rentals to drop further.