The rental market may improve this year, as home buyers are likely to put off purchasing amid the recent cooling measures, said analysts.
Over the next year, a larger pool of tenants might stabilise the rental market or cause a five percent increase in rents.
This counters earlier expectations of a downtrend in rents due to a large supply of completed units entering the market this year. Rents were expected to soften as new public and private homes will be completed in the next few months.
However, some consultants argue that foreigners who once considered buying may turn to the rental market, after being dissuaded by the 10 percent additional buyers’ stamp duty (ABSD).
According to Alan Cheong, Head of Research at Savills Singapore, the tightening measures “effectively increase their (financial) risks tremendously if they buy and…get reassigned elsewhere or lose their jobs (within the first two years).”
“Leasing has always been seen as a faster and easier decision to make as compared to buying a property because of the lower commitment level and the smaller amount of money required upfront,” said Steven Tan, Managing Director at OrangeTee.
The Urban Redevelopment Authority’s (URA) rental index of non-landed homes in Q3 2011 showed an increase from the previous quarter, albeit at a slower pace in suburban and central areas.
Demand from foreigners and expatriates will likely drive the residential rental market but the local factor cannot be ignored. Some locals may want to sell and rent, until they can buy at a lower price, while others may be unwilling to sell their homes, considering the weaker market.
Source : PropertyGuru – 4 Jan 2012