Over the past few months, rents have gone up in areas such as Orchard Road and Bukit Timah.
Based on URA data, the non-landed private residential rental index went up by 30% y-o-y in 2022. While this headline-grabbing number has stoked the market in recent months, it pales in comparison to the jump in the rental index in 2007, says Cheong. “While the increase in interest rates is one of the many factors that motivate landlords to increase their asking rents, the greatest determinant of the high rents is the balance of demand and supply in the rental market,” he adds.
“Rents have climbed to a level where it has eroded the personal consumption of some renters and reduced their housing affordability. As a result, this group has no choice but to move further from the central region,” says Cheong. However, if the situation persists, some multinational corporations may have to consider the higher rental prices when they intend to hire overseas nationals to live and work in Singapore, he says.
Ong adds that many returning Singaporeans who have lived and worked overseas in the past few years are also reclaiming the properties they own, thus pulling them out of the rental market. This is another reason why the supply of rentable properties has dipped.