You might have heard someone tell you this, "... the rental market in Singapore is so weak, rental prices have been falling...".
Is their statement justified? Lets take a look at the data.
We can see from the graph that there was a boom in the rental market from 2007 to 2008, mainly fueled by the surge in demand from the foreigners ("foreign talents").
During the Great Recession/ Global Financial Crisis (2008/2009), there was a dip in the global economy, many companies were pulling back on sending expatriates overseas to cut-costs.
During the recovery period, Singapore encouraged employment of more foreign talents to boost our economy quickly. This resulted in a lot of unhappiness with Singaporeans during the General Election 2011 (GE 2011). Another issue during GE 2011, was the rising costs of public housing.
In response, the Singapore Government steadily reduced the number of foreigners it allowed, and rapidly built new BTOs to beef up the supply. As a result, demand fell and supply increased, causing rental prices to drop.
Now that we know this history, what about the future prospects of the rental market?
Rental Market 2018 and beyond
In order to keep GDP growth at 2-3% per year, the Singapore Government released the "Population White Paper 2013". A plan stating how the government plans to counter our (1) Low Birth Rates & (2) Aging Population by introducing more foreigners to boost the economy.
As of 2018, we have official reached the status of an Aging Population. This has huge financial, economic and social implications for our country. Read more about it here.
Which is why the government has no choice, but to make the unfavourable decision to boost our economy using our foreign talents.
SO HOW WILL IT AFFECT THE RENTAL MARKET?
Let us examine the governments employment behaviors and plans.
We can see that the government has been increasing the number of employment pass holders, which are profile of tenants who are usually in white-collar jobs and have the purchasing power to rent condominiums.
Furthermore, in recent news, it has been reported that...
Moving forward, Singapore is aiming for a Digital Generation. This is a big and challenging jump for our country. Which is why the government is opening the doors to "skilled and experienced" foreign talents to jump-start this programme.
In the near future, as we continue to adopt friendly foreign employment policies, we can expect to see more foreign talents among us.
But policy still remains that foreigners are unable to own public housing in Singapore. Which leaves them the option to either rent or purchase a private property.
Based on many analysts research and predictions, they expect a recovery in the rental market by 2020. And right now the private property market is ALREADY seeing a recovery.
... ... BUT do not recklessly enter the property market without first doing proper research and indepth financial calculations. Not every property will experience the same capital gains and rental yield.
Our research and data which we have collected has helped many clients to make informed and safe decisions for their property purchases. If you are looking to purchase a new property for yourself, feel free to contact us for a short discussion.
Many Thanks TeoDuoProperty
Ian Teo 9759 2826
Peter Teo 8388 4881
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