|
Getting your Trinity Audio player ready...
|
Deciding Between Renting vs Owning a Home
Singapore’s housing market has defied logic throughout the past three years, making renting a home a viable option for 2024.
A global pandemic didn’t collapse property prices but sent them to new heights. Last year, mortgage rates continued to rise, taking cues from the U.S. Federal Reserve, and sales plummeted with the introduction of the new Additional Buyer’s Stamp Duty (ABSD) imposed on 27 April 2023.
In 2023, the price increase for private homes was slower at 6.8%, compared to higher increases of 8.6% in 2022 and 10.6% in 2021. This marks the second year in a row where the rise in home prices has cooled down a bit.
Over the past few years, Singapore’s housing market has demonstrated resilience and unique trends, defying global economic pressures with, for example, the impressive record-breaking price per square foot (psf) for Watten House at S$3,484. Despite challenges, the market has seen price fluctuations, rental rates, and increased construction activities, shaping the scene for potential homeowners and renters.
Yes, mortgage rates have increased slightly to 3.5% to 3.75%. Still, despite these projections, the exact timing and magnitude of rate declines remain uncertain, with financial institutions and experts offering varying forecasts. Some predict modest reductions by mid-2024, while others expect rates to maintain current levels for most of the year. The divergent views suggest that mortgage rates might not significantly change until late 2024.
This year may offer a new plot twist: Almost twice the number of apartments were completed in 2023 compared with the previous year, which was also the highest construction since 2016, delivering renters and buyers more new private properties than they’ve seen in almost a decade.
All of this means that if you’re thinking about whether it’s better to rent or buy a home in Singapore, right now could be a good time for people looking to rent. If you’re considering buying, it should be met with cautious optimism, with Singapore property prices looking like they will remain resilient in 2024.
Is 2024 the Year of the Renter?
This year, Singapore’s rental home market shows a distinct trend. For the first time since 2016, the island has seen a surge in residential property completions, with about 21,300 units finished in 2023 — double the number from the previous year. This influx of new units led to a quarterly rental decline, the first in three years.
The Urban Redevelopment Authority (URA) notes that while rentals of private residential properties went up 8.7% in 2023, this increase was much smaller than the 29.7% jump in 2022. EdgeProp.com reports that the asking rents mainly remained unchanged last year, dropping by about 3.1% to a median of $625 per square foot by the fourth quarter of 2023.
Despite the increase in housing supply, rental costs remain high, especially in the Core Central Region, where rents per square foot are nearly 28% higher than pre-pandemic levels. According to Sunita Gill from Singapore Luxury Homes, “This shift has brought the market to a new baseline for pricing”.
2023 property sales hit a 15-year low, even with more units available than in 2022. This could suggest that many potential buyers await the market to offer even better options. Personal factors, like the need for an extra bedroom for a growing family or relocating closer to elderly parents, continue to drive the decision to rent a home vs owning a residential property for some.
The rise in available housing might help prevent further rent increases, creating more opportunities for home renters, particularly for properties in desirable locations or with special features.
“With the increase in available properties, renting a home in Singapore might find themselves in a stronger position to negotiate,” says Gill.
Step Into a Luxury Home for Rent
Singapore Luxury Homes offers premium home rentals for luxury properties, catering to those seeking high-end living spaces with unmatched amenities and locations. Connect with our team today if you’re looking for a luxury home to rent.
