Singapore rent prices are still sky-high. Long-time expats are having to consider drastic changes

SINGAPORE - Foreigners in Singapore are still feeling the pinch, as rental prices continue to rise and there is little sign that they will return to their pre-pandemic levels anytime soon.

Rents are rising in Singapore, and expatriates who have lived there for a long time are having to dig deep into their pockets.

The data of Singapore's Urban Redevelopment Authority rental index shows that the prices of private residential properties will increase by 29.7% in 2022, compared to 2007.

Some foreigners who live here claim that their landlords are taking advantage of a hot property market in order to raise prices. In some cases, they have even doubled the rent.

According to Christine Li, Knight Frank's head of Asia-Pacific Research, despite the apparent slowdown in rent increases, landlords should still expect double-digit price growth.

She said that if rents keep rising, more people would buy a home rather than pay higher rent prices.

Rents could correct themselves, but it would be mild. It is unlikely that they will retrace the increase since 2021.

Some industry experts believe that prices may ease towards the end of the year.

The slowing economy, the impact of the tech sector and the subsequent fallout on the rental market will only be felt in the second half 2023. Alan Cheong is the executive director for research and consulting at Savills Singapore.

He told CNBC that, "however, even if the rents did correct themselves, they would be mild, and unlikely to reverse in any significant way the increase which had occurred since 2021."

What expats do to cope

Some expats living in Singapore say that landlords demand higher rents than the market rate. Many are looking for new ways to avoid rising rents.

Francesca's lease, an Indonesian expat living in Singapore with her wife and children, is set to expire this month. Her landlord demanded double the amount at the beginning of the year to extend the lease.

The 34-year old woman said that her landlord initially requested a 60% increase in rent but increased it later to 100%.

"Every time we bargain, he increases the price... We were really angry because it was not fair," Francesca said. She added that there were brand-new apartments with better amenities a few streets away, which cost less than the amount her landlord asked for.

The names of all the expatriates interviewed for this article were not revealed.

Move to another location

Francesca, who was looking for an affordable home in Orchard's shopping district, said that she saw apartments listed at $10,000 but "looked as if they belonged in a horror film".

She laughed and said, "I'll film a horror flick there but I won't live there."

Francesca reported that many potential landlords had offered "rent-free deals" in order to get her to accept higher prices. This essentially meant no rent for the initial few months.

She explained that this usually occurs when someone owns several properties and hopes to raise the rent of one in order to do the same with all the others.

Possible departure from the country

Debbie, a second expat living in Singapore, received a similar flexible contract.

The 42-year old woman has lived in River Valley's central neighborhood for eight years. Her rent went up from $9,250 in December to $13,200.

She was initially upset about the 42% increase, but she had to accept it because her contract allowed her to cancel the lease after just three months "as long we leave the country".

She said, "I didn’t want to leave for a short time just in case we left." "Our landlord was aware that we were in a hurry, so she took advantage of it."

Debbie said that she was considering leaving Singapore, because her husband's wage had "stayed exactly unchanged."

We have three children attending international schools, and the cost is increasing rapidly. "Even with a higher rate of tax back in New Zealand we might be better moving home," said she.

Her family chose to stay, but they had to reduce their spending on eating out and taxis.

Francesca on the other had managed to find an apartment in the same Orchard condominium complex for 50% more than she pays now, rather than the 100% increase that her landlord was offering.

Downsize

Not everyone has been as fortunate.

Melinda considered returning to the U.S. when her landlord proposed an increase in rent of 110% for her Bukit Timah house with seven bedrooms. Her neighbor was in the same situation, and she decided to move to Penang.

Melinda decided to downsize instead of uprooting her children, who went to school in Singapore.

She now lives in an apartment on Orchard Road, the same place she stayed when she moved to Singapore for the first time a decade earlier.

Thankfully, she now pays less rent than she did a decade earlier when she moved in.

Buying a Property

Kristen, Singapore's permanent resident, was in a unique situation.

Kristen and her five-member family lived in Bukittimah from 2019 to 2022. Late last year, however, her rent went up from $9,000 to $15,000 per month, and did not include previous benefits like aircon servicing and garden maintenance.

The mother of two said, "This made us cry because we assumed we would stay there for a very long time... But we could not afford it. There's no possible way we could."

She said, "When we looked at the numbers, it made perfect sense to purchase a property." Her monthly mortgage payment for a private flat is now $11,000.

Kristen, a real estate agent who also works for CNBC, said that tenants face a tough competition.

She said, "It is not like in the past where I could show my clients properties on Monday, Wednesday and Friday." If they find a property they like, it's important to lock in the deal immediately. Otherwise, "it will be gone by Friday."

What is driving the price increase?

Experts cited several factors that contributed to the skyrocketing rental prices, including pandemic effects.

Demand was driven by a confluence factors, including Gen Y's and Zs wanting to be independent of their parents, working in the privacy of their home. Also, an influx of professionals from abroad.

Knight Frank's Li explained that Singapore's reputation during the pandemic as a "safe-haven" grew when foreigners fled to Singapore to avoid the strict measures in China or Hong Kong.

The pandemic, in addition to increasing demand, also caused delays in the construction sector, which exacerbated inventory problems in the housing market.