According to an online news report in todayonline.com, November rental numbers for the property market in Singapore is in the negative territory. As everyone would have been reading, the Singapore property market has been declining in both transactions and prices in 2014. This has affected the rental market too and it has been falling for the 10th consecutive months. It’s pretty amazing with the statistics available for the Singapore property market. Everything is so transparent! Compared to same period last year, rent has decreased 5.3%. The expectation is for this to continue as supply growth of private homes for rental is increasing faster than demand. As usual, larger units are finding it harder to rent out. Thus, for those who wants to rent out faster, prices would have to go down. This would mean more weakness moving forward. This has also extended to the HDB market too where compared to the same period last year, rents have dropped 2.2 percent.
While many statistics continue to say that supply is much higher compared to demand, I think the main issue is that during periods of negative sentiments, many are not willing to spend too much extra compared to what they need. Based on the planning, I think the supply has always exceeded demand. If it did not, then where would those people who needs to rent a roof over their head stayed? I mean, seriously if demand has always been very strong, then the rental ads would not have been that many in the online portals, right? Unless many of these units for rent were done ‘under-table’? Anyway, during good times, if I am renting a room or a home, I would not mind to pay more. Perhaps 5-10% more to secure a unit that I really like. During slower times though, I may think the next few months may be more uncertain, thus I would definitely negotiate for a lower rent or even rent in another cheaper area. I sincerely believe this would be one major reason why rental is coming down. Statistically, I have no doubts about the numbers but emotionally, I think it explains better.
I have yet to see it happening in Kuala Lumpur, at least not on such a scale like Singapore. However, one friend confided in me that she found it hard to rent out her unit in Penang island. The demand is there, people are still viewing but the decision has been very slow. Perhaps some of these people wanted much cheaper rental but if they tell such numbers, my friend may scold them. I am not sure but I can safely conclude that even for Penang, the demand is still there but people are now much more cautious, much more calculative. Thus, when decisions are slower, it would depend on who can wait longer. If a buyer could not afford to pay the mortgage continuously without any rental income, the prices would also be coming down very soon here in Malaysia. My friend’s final statement? ‘I think I am open to renting it out even if it does not meet my mortgage. Minor negative is better than zero income’. I agree with her and I would also look forward to continuous moderation of prices for the really overpriced ones. Happy renting.
written on 11 Dec 2014
Next suggested article: Should Singapore follow China for property market ‘warming’?
Leave a Reply