As property prices continue to slide, the extent of the drop may be cushioned by rental demand that remains healthy. It is not surprising given the strong economic report in the last 2 quarters and a moderate to strong GDP numbers going forward for the rest of the year.
According to URA statistics, private residential rental volumes in Singapore went up by 4 percent year-on-year. There were 13,077 leases of private homes, excluding executive condominiums, in Q1 2014. 37 percent (or 4,839 leases) of these were in the city fringe areas, higher than the 30.6 percent and 32.4 percent recorded in the Outside of Central Region (OCR) and Core Central Region (CCR) respectively. Although rental in Rest of Central Region (RCR) edged up slightly, the overall rental index of private residential properties continues to ease 0.7 percent quarter-on-quarter (QoQ) in Q1 2014. For an expatriate it makes good economic sense to rent a property just outside the city core with just an MRT stop or two away to balance ever tighter rental budgets.
On the whole, vacancy rate climbed up a tad to 6.6 percent from 6.2 percent in the last quarter. There are now 19,284 vacant units out of the current 293,283 private homes. Most of the increase came from Eastern region where more units are completed. Vacancy rates either remained flat or declined in the other regions.
With the state of the world’s economy in a very fluid state and external influences having a strong bearing on the Singapore economy, more pressure on high-end market residential rents can be expected this year as expatriates’ housing allowances continue to be trimmed. This is not helped by the increasing number of newly completed high-end projects in districts 9, 10 and 11.
However, the projected strengthening of Singapore’s economy will help to support the pace of growth in private residential leasing demand.