Rental Boom - Pay up or get out!

This article was extracted from the Sunday times on 13 May 2007.

Hopefully, it will help you to understand why your landlord is asking for

more rent this year. And gives you an idea of how much new tenants are

paying for their rentals.

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Rental boom allows landlords to jack up prices and demand :" Pay more or

get out ". Tenants feel the heat, with some forced to downgrade, as rents

of private units spike.

When the lease on her River Valley apartment came up for renewal, 31

year old operations manager Jordan Brumby was told her rent was going

up by $1000 a month - an increase of 55 per cent from the $1800 she

used to pay.

It was appalling, but the Australian, who now pays $2800 a month for a

three bedroom unit at Nathanville, felt she had no choice because

"everything else was much dearer and not as attractive"

After about eight years of stagnation, the rental market has been picking

up steadlily in recent months. Bad new for tenants, good news for

owners. Urban Redevelopment Authority ( URA ) figures show that private

residential property rents rose 7.6 per cent in the first quarter of this year

compared with a 5.3 per cent increase in the last quarter of last year.

Property agents said that since last year, rents have gone up by at least

20 per cent to 30 per cent across the island, and not just in the prime

central districts such as Orchard, Newton and Tanglin.

According to figures from property agency ERA, rents in the western parts

of Singapore such as Bukit Batok and West Coast have increased 28 per

cent, while rents in eastern areas like Tampines and Pasir Ris have risen

23 per cent. Although rental prices have surpassed the last high in 2000,

they have yet to break the 1998 records.

But ERA assistant vice president Eugene Lim predicts that "at the rate we

are going, there may be a new record high this year". Mr Lim said the

buoyant rental market is due to strong demand from foreigners. And

generally, when the economy is good, as with other bustling cities like

Hong Kong and London, "there are more expatriates who need homes"

said Mr Mohamed Ismail, CEO of property agency PropNex.

High demand is clashing with limited supply, due to the " fall in stock of

property available for lease due to collective sales ", said Mr Lim. He

added that the market has lost about 6000 units in the past two years. In

contrast, the nunber of foreigners coming to Singapore grew by 9.7 per

cent last year to 875000, the biggest leap in six years.

While tenants feel the squeeze, landlord like Madam Jenny Khoo are

celebrating. Madam Khoo rented out her 1340 sq ft apartment at Tanglin

Park for $3100 a month last year. This year, a new tenant was willing to

pay $5200, an increase of nearly 70 per cent. "We were expecting more

rent, but we didn’t expect it to be so high", said the housewife.

Suddenly, it is no longer a buyer’s market and landlords have the luxury of

adopting a take-it-or-leave-it attitude, forcing many tenants to

downgrade. "About a third of my pay now goes to rent and it’s burning a

hole in my pocket," said Miss Brumby. "I’m really startig to regret it."

Aritcle by Melissa Sim