Singapore’s softening rental market saw more tenants going for shorter leases.
Notably, the rental index for private homes dropped three percent for the whole of 2014, while that of public flats fell 2.1 percent. The vacancy rate of private homes stood at 7.8 percent as at end-2014, or its highest in almost a decade.
Experts believe that the rental scene has turned into a “tenant’s market” as more residential units are expected to be completed over the next two years.
According to Lena Low, Key Executive Officer at Horizon Real Estates, nine of the 10 rental inquiries that she used to receive were for two-year leases. Now, fifty percent were asking for one-year leases, she said.
ERA Realty revealed that one-year leases accounted for 39 percent of private home rentals in 2014, up from 36 percent in 2013.
For public housing, one-year leases increased from 87 percent in 2013 to 90 percent in 2014.
But not everyone wants shorter leases, said OrangeTee agent Derek Teng.
“If it’s a great location and good price, they will sign a longer lease,” he said, adding that majority of his clients’ tenants still went for two- or three-year leases.
Agents noted that the softer rental market also attracted more Singaporeans.
In fact, two in 10 tenants now are locals, an increase from one in 20 in 2013, said OrangeTee agent Tan Zhi Wei, who markets private units in the central region.
“Many are renting to reposition their portfolio. They are (waiting for) prices (to) go even lower before buying,” said Tan.