Singapore rental market

There has been a lot of news about how the rental market has gone bananas and we are seeing escalations in rental. This is contributed by factors like expats coming into Singapore and construction delays.

Let’s look at two factors that’s actually causing this increase in rental and why landlords actually have to charge more.

1. Property tax has gone up

2. Interest rates has also gone up. It has almost doubled and is expected to hit four percent.

Let’s take a closer look at the numbers for rental versus owning a place

I’m going to use Kovan Residences two bedroom as example.

The current rental for two bedroom is about S$4000 a unit, vs a unit just transacted for 1.36 million

At 75% Loan To Value (LTV), this would mean that you will need to borrow S$1.02 million.

Assuming a very high interest rate of 4%, 30 years tenure, your money mortgage comes up to S$ 4870, which is a significant amount.

What is important is to split and look at this in two ways:

1. The Interest component which is other people’s money
The interest component in this case will be S$3400

2. The Principal which is effectively your own money – S$1470.

Now, let’s say I add the maintenance fees of S$ 311 to the interest

I add property tax of S$79 this comes up to S$3790 which is your cost of ownership.

When you look at it this way, a rental of S$4 000 versus paying monthly S$3790, not taken into consideration the downpayment that you will have to do upfront, isn’t it cheaper to rent rather than to buy right now?

What you think?

”Anne is the most amazing, caring and professional estate agent. She's is our first agent as we'd never rented a house before. She guided us with high level of professionalism and patience. Under her, we managed to rent out the unit to a suitable tenant, within a short period of time. She went through the extra miles to follow up with all the necessaries. The transaction handled by her was totally hassle free. We will not hestitate to recommend her to our friends and families.
Jessica (landlord)16 June 2019