At the end of 2022, after several years of renting a 3-bedroom luxury apartment of over 70 square meters in an apartment building on Balestier Street, Ms. Thu Ha's two daughters (living in Nha Be District, Ho Chi Minh City) had to move further away and move into a smaller room in Ang Mo Kio, living with the landlord.
Struggling with "price storm"
The owner of the apartment that Ms. Thu Ha has rented for the past few years has requested a new rental price of 3,800 SGD/month (equivalent to 70 million VND) excluding electricity and water, a sharp increase compared to the previous price of 2,700 SGD/month (more than 48 million VND).
To cover this expense, she rented a bedroom to a Vietnamese student. Now that housing prices have gone up, the other student can no longer afford it, so the group had to… disband!
For many months now, Singapore has been in a situation where there are not enough houses to rent, even though prices have increased by an average of 45%-75%, and in some cases up to 100% compared to before the COVID-19 pandemic.
Rent prices have skyrocketed, but potential tenants still have to compete to schedule viewings. Some even accept any offer without even coming to view the house.
Not only luxury apartments, HDB apartments also have skyrocketing rental prices. In the photo : An HDB area on Mergui Road
Andy Vu, a Vietnamese real estate broker in Singapore, said that he and his colleagues have had almost no time off on weekends in recent months because customers flock to see rental properties.
The schedule for viewing a house will usually be consecutive, one person will finish viewing and the next will be followed by the broker, sometimes just standing there saying hello to one person and then letting the next person in to view.
According to Mr. Andy Vu, there are rental houses with a list of more than 22 people registering to view, not to mention many people who were eliminated by the landlord right from the personal profile review round.
Through friends, I learned about the case of an executive condo (EC) - a more modern type of apartment than the HDB ( government- built apartments) that is quite popular in Singapore.
This 3-bedroom apartment on the 11th floor is nearly 85 square meters , close to Canberra MRT station. The owner has just finished a contract of 2,600 SGD/month (more than 46 million VND/month) and wants to rent it out for 4,500 SGD/month (more than 80 million VND/month).
There were more than 20 people who signed up to see the house, but only the third person agreed to the rental price, not only did they not haggle, but they also agreed to pay for some repairs in the house out of their own pocket. The landlord agreed immediately!
Not only have luxury apartments seen their rents skyrocket, but the rents for government-built housing that only Singapore citizens are allowed to buy, known as HDB, have also skyrocketed.
My friend just finished renting a 3-bedroom HDB unit in the North of Singapore last September. The previous rental price was SGD 2,500/month while the average price of houses around it had been pushed up to SGD 3,800 - 3,900/month.
My friend's tenant was very happy to renew his contract even though the new rent had increased to SGD 3,500/month, because moving out would not guarantee he would be able to find another place to live.
Supply is too short!
Tenants in Singapore, whether foreigners (including Vietnamese) or locals, often choose a place close to their children's schools before considering the parents' workplace. When the lease expires, if the landlord refuses to continue renting, the tenant only has 60 days to find a new home!
There are many reasons why Singapore's already high housing prices have become even higher, including both purchase and rental prices.
With the policy of settling down and working happily of the late Prime Minister Lee Kuan Yew, Singaporean citizens when registering for marriage will have the right to register to buy a new HDB apartment at a preferential price. The Singapore Housing Development Board (HDB) will calculate, build and sell these apartments (at a preferential price) to citizens of the island nation - this house is called BTO.
BTO apartments are continuously launched on the market according to the calculated schedule and ensure the private living needs of citizens of the lion island nation.
A typical HDB area of Singapore
However, this entire smooth process was disrupted by the COVID-19 pandemic. All construction projects from industrial to residential in Singapore are undertaken by migrant workers. As the pandemic raged, a large number of migrant workers contracted COVID-19 and were quarantined while most countries closed their borders.
As a result, all housing construction projects in Singapore have been stalled for a long time, directly affecting the progress of BTO housing distribution, which has been extremely on schedule for many years.
Last year, due to the large number of pending BTO contracts, HDB said that the progress of handing over BTO houses would be 2-3 years slower, resulting in the average waiting time of a project from the time it is registered until it receives the house being up to more than 5 years instead of just nearly 4 years as before COVID-19.
A small number of foreigners in Singapore paid their rent to return home to avoid the pandemic, but in return, many Singaporean citizens and Singaporean permanent residents abroad returned home and they also had a need to rent a house to live in. The group of HDB BTO customers who had not yet owned a house when they were ready to move out also entered the rental housing market. The pandemic subsided, Singapore reopened, and foreign workers continued to come here to work...
All of the above factors combined make the demand for rental housing in Singapore hotter than ever while vacant houses for rent are almost gone on the market.
Can't buy!
It is rare for foreigners who come to Singapore to work and live to buy a house because the price is too high. Foreigners who buy their first apartment in Singapore for 1 million SGD (nearly 18 billion VND) will have to pay about 33% more for taxes and fees.
The apartment complex I have lived in for the past few years has 3 swimming pools, a hot tub, a tennis court, a gym, a private parking lot... The apartment my family rented was a 3-bedroom apartment with an area of 130 square meters, with a rental price of nearly 5,000 SGD/month (about 89 million VND). In December 2022, an apartment similar to the one I am living in on the upper floor was advertised for sale by the landlord with the lowest price of 2 million SGD (more than 35 billion VND). There were 4 families who came to see the house, including a Vietnamese Singaporean family. In the end, the apartment was sold for 2.1 million SGD to a Chinese family.
Therefore, renting a house becomes the optimal solution. However, this is also too difficult in the current situation. In particular, the number of vacant houses suitable for the budget of ordinary workers is even more limited, and many landlords do not even want to rent to this group of people because the price is not good.
On forums and social networks, many Vietnamese workers continuously share stories of landlords arbitrarily canceling their commitment to not continue renting or unilaterally increasing rents, forcing them to find more compatriots to live with them to share the burden.
Singaporean press recently reported an incident in which a 3-bedroom HDB apartment, according to regulations, can only accommodate a maximum of 6 people, but the homeowner, during a surprise visit, discovered that there were… 21 people living in his apartment.
Will rents cool?
Singapore private home prices rose 0.4% year-on-year in the fourth quarter of 2022 amid a lack of major projects, some government cooling measures, rising interest rates and a weaker global economic outlook. This was a 3.8% increase from the previous quarter, according to the Urban Redevelopment Authority (URA). For the full year of 2022, Singapore private home prices rose 8.6%, down from 10.6% in 2021.
Ms. Christine Sun, Senior Vice President of Research and Analysis at OrangeTee & Tie Real Estate Company (Singapore), commented that housing prices have not only decreased in Singapore but also in many other countries due to the impact of central banks raising interest rates to control inflation. "Real estate is inevitably affected when households tighten their spending and rising interest rates make some potential buyers hesitate," Ms. Sun commented to Channel NewsAsia (Singapore).
According to statistics, private housing rental prices increased by 7.4% in the fourth quarter of 2022. This rate was 8.6% in the previous quarter and 29.7% for the whole year of 2022. The Singapore market has seen rental prices increase for more than 2 consecutive years due to demand exceeding supply. By 2023, according to Ms. Sun, supply will increase significantly with 19,291 new private houses, including EC apartments, entering the market. Similarly, Mr. Lee Sze Teck, an expert at Huttons Asia Company (Singapore), estimated that the number of new private houses launched in 2023 will range from 10,000 to 12,000 units.
The increase in supply could ease pressure on rents, especially in suburban and fringe areas, where Ms Sun predicts rents will rise by 13% to 16% this year.
Phuong Vo
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