Rental rates in the private property market are poised to rise with the expected influx of some 80,000 foreign workers this year.
Analysts said this is because of the shortage of private housing.
And the supply situation may not improve this year as only 5,000 private housing units are expected for completion by year’s end.
The government’s forecast on the number of foreign workers here comes on the heels of an expected boom in the job market.
And as housing needs for these foreign workers increase, rental rates are likely to follow.
“This could cause rentals to rise anywhere from 2 to 5 per cent for the second half of this year,” said Nicholas Mak, executive director of Research and Consultancy at SLP International.
Second-quarter figures from the Urban Redevelopment Authority (URA) showed private property vacancy rates were at 5.4 per cent.
Analysts said private residential property rental yields are currently at 3 to 4 per cent.
With the rise in foreign workers, they expect rental yields for non-landed properties to increase by about 1 per cent.
“Typically, the rental market in Singapore is pretty stable. It will only drop, for example, in times when the economy is in a recession. That’s when big numbers of foreign workers may then leave the country,” said Eugene Lim, associate director of ERA Asia Pacific.
Analysts said the latest cooling measures are also unlikely to impact the private property rental markets over the short-term.
One of the new measures introduced include a lower loan-to-value ratio at 70 per cent for buyers with more than one mortgage.
This may deter buyers who plan to purchase a second property for rental and investment purposes, analysts said.
Source : Channel NewsAsia – 15 Sep 2010