July 16, 2007

Singles feel the heat from sizzling private home rentals

Some are having to downgrade or move back to parents' homes to lower living expenses

By Jessica Cheam

THE boomtime in Singapore's property market is hitting one group of house-hunters hard: singles.

Across the private market, property agents said prices in the past three months have gone up by as much as 40 per cent, with rents at some locations even doubling.

These singles, usually professionals in their 20s to 40s, now face the prospect of downgrading from their current rented homes, sharing with others, or moving back in with their parents in order to reduce living costs.

In the first quarter of this year, Urban Redevelopment Authority (URA) figures revealed that private residential property rents rose 7.6 per cent from the previous quarter, compared with a 5.3 per cent increase in the last quarter of last year.

Second-quarter figures are expected at the end of this month.

Recent trends show that these private property tenants have downgraded to renting Housing Board (HDB) flats - or pooling together resources to purchase flats in either the private or HDB resale market, said Mr Eric Cheng, the senior division director of property agency PropNex.

According to PropNex's surveys, singles account for 16 to 17 per cent of total property transactions - but this has since risen by 2 to 3 percentage points in the last three months.

Mr Dennis Yong, the president of real estate company HSR Group, also noted that the rentals of private studio apartments, which used to be around $1,100 a month, are climbing upwards of $2,000. As a result, many tenants have downgraded and the take-up rate of HDB flats has been 'crazy', he said. 'You advertise in the morning and it's snapped up in the afternoon.'

Flight steward Joe Tan, for example, said he was forced to move out of his two-room, 960 sq ft apartment at Bayshore Park last month when his monthly rent was raised from $1,600 to $2,800 at the end of his lease.

Unable to afford the new rent, the 36-year-old has opted to rent a smaller HDB flat in Tampines for $1,100 a month. He is thinking of buying a property.

Another local, Mr Kevin Lim, 35, a freelance media producer, said that he was now looking for an affordable flat after his landlord raised the rent for his private apartment in Novena from $1,800 to $3,500.

Mr Tan said the increase was unreasonable for the standard of his flat. 'There are no affordable private flats for us any more, unless we move out to the sticks,' he said.

Knight Frank director of research and consultancy Nicholas Mak said the rental squeeze was due to demand surpassing supply, which has been aggravated by a massive reduction in flats as a result of the recent collective sales frenzy.

With property values going up, landlords expect higher returns, he said.

The increasing number of expatriates working in Singapore, many of whom have a higher income because of relocation packages, also exerts pressure on the market.

While HSR's Mr Yong said the rental hikes have also affected the outskirts, Mr Mak felt that affordable flats were still available further away from the city. He expects the demand to ease after 2009, when more residential projects will be completed.

'Then, there will be a real test of the sustainability of current rental market prices,' he said.

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