It seems that the starting age for young adults to buy their first home is increasing in accordance with rental prices, forcing more to adopt the title of co-tenant in order to afford their own private space.
The rental price hike comes on the back of the latest cooling measures in October 2022, which saw a lowered Loan-To-Value (LTV) limit, a higher medium-term interest rate, and a 15-month wait imposed for private property owners buying non-subsidised HDB flats.
Is it really that expensive to buy a house?
The numbers are staggering. Over the last two years, the average price psf to buy a resale HDB flat has increased by 20.14% from S$454 psf in Q4 2020 to S$545 psf in Q4 2022. The average price of a 4-room HDB flat (the most common resale flat type) rose by 20.23%, going from S$470,462 in 2020 to S$565,637 in 2022. That’s a difference of $95,175 in two years!
To put it into further perspective, the average price of a resale HDB flat climbed by S$3,965 every month from 2020 to 2022. Despite this, the volume of HDB transactions has been notching all-time highs month over month, with 9,328 units exchanging hands in Q3, compared to 5,219 transactions in Q4 2020.
What about condos?
On the other hand, condos fared slightly better (if you can even say that), having risen by 14.79% from an average price psf of S$1,440 psf in 2020 to S$1,665 psf in 2022.
Average prices for 2-bedder condos rose by 17.61%, climbing from S$1,240,595 in 2022 to S$1,459,032 in 2022. That’s a difference of S$218,437, or a S$9,101 price increase month over month over two years.
Okay, forget about buying. Let’s talk rental.
With the price tag of houses being excruciatingly unattainable, more adults are turning to the rental market to fulfil their housing needs. However, it’s not all sunshine and roses. More tenants are being forced to co-share the same spaces due to rent increases.
Over the past two years, the average rental price for HDB flats in all regions has increased between 15.90-31.87% – with OCR properties seeing the highest at almost 32% rise in average rent.
Two years ago, Desmond Tay and Faith Ng, both 29, opted to do away with a wedding banquet and put the money towards renting a 2-bedder condo in Toa Payoh. “We both came from large, noisy families living under one roof and knew we wanted our own space, especially when everyone was stuck at home during the pandemic, so we decided to rent.”
However, when their two-year lease drew to a close, they ran into an unpleasant surprise – their landlord decided to jack up their rent by more than 50% when they requested to extend their lease. “This took us completely by surprise. We’ve always had a good relationship with our landlord, and she never gave any indication she was going to spring this on us.”
The rent increase meant they would need to pay an additional S$1,200+ every month, something the young couple wasn’t prepared to do.
A lightbulb went off while they were lamenting about their situation over dinner with friends who found themselves caught in similar situations – Jun Hao and Kelly had a newly renovated BTO and had recently suffered pay cuts due to the pandemic, while Michael desperately wanted to move out of his family home.
“We were sitting around whining about the rising costs of living when one of us joked that we should all live together. Granted, we weren’t the most sober at that point, but the idea seemed feasible, and there were no reasons why we shouldn’t give it a try.”
After their lease was up, Desmond, Faith and Michael moved into Jun Hao and Kelly’s 5-bedroom HDB flat in Toa Payoh. The friends were more than co-tenants. They shared a sense of solidarity, taking turns to do housework and even having regular home-cooked dinners and game nights together.
“I think we recognised we were helping each other out. Jun Hao and Kelly were grateful for the additional rental cash flow because it helped them staunch their issue of income leakage, and we needed an affordable place to stay. Michael was happy to be away from his toxic household and hang out with his friends. It was a win-win-win situation all around.”
When asked if they had any plans to be homeowners, Desmond gave a non-committal shrug. “We crunched the numbers and realised buying a home didn’t fit into our life plans. Unless the price of housing drops drastically in the near future, we’re quite happy renting for the rest of our lives.”
Hi, I’m your new roommate.
For Lennard, a bright-eyed, bushy-tailed social media manager from London, all he needed was a single room in the Central area. He had friends who worked in Singapore pre-pandemic, and their rent sounded reasonable. He didn’t know that renting a home had never been this expensive, especially in post-pandemic Singapore, and his company’s allowance wasn’t enough to cover his rent and living expenses.
He faced a conundrum: give up the job and a new adventure in a different country, or seize the opportunity and pay through the nose for accommodation? Eventually, Lennard decided to take a leap of faith and made the move to sunny Singapore.
A week before he left, he trawled through countless forums and various Facebook groups in search of either a room within his budget or a roommate. He shook his head while recalling the stress of his ordeal. “I can’t tell you how many sleepless nights I spent sending messages to random strangers online, asking them if they had a room to rent.”
With time running out, he received a Facebook message just three days before his flight. It was from two Singaporean friends looking for an additional roommate to round out their living arrangement. “It was pretty perfect, although it was slightly out of my budget. I decided to take it because they seemed like really cool people, and the place was just two MRT stops from my office.”
For condos across the CCR, RCR and OCR, CCR condos commanded the highest average rent prices over the same period, at 42.11%, followed by OCR (34.95%) and RCR (33.72%).
If we look at average psf rental prices across the districts for condos, it is OCR condo rents which have increased the most over the past two years – at 37.24%, compared to CCR (29.34%) and RCR (33.43%).
Upon further probing, Lennard revealed he was paying S$2,200 for one room in a 3-bedder condo.
Lennard doesn’t regret making the move, saying that having co-tenants was akin to recreating the vibrancy of his university dorm-life phase, but now as a full-fledged adult. “My roommates work in similar industries, so we have a lot in common to talk about. Sometimes we hang out on weekends and go out for meals together. It’s like living in a really chill, laid-back co-working space. It’s also nice that I don’t come home to an empty, quiet house”.
When asked about the drawbacks of living with others, he leaned back in his chair and laughed. “I just wish my rent could be cheaper. Or maybe that I had more living space. But I can’t complain; I know others who are paying more for less space. And in not-as-great locations, no less.”
Will the rental market ever simmer down?
Nothing was ever quite the same after the pandemic. The ever-increasing number of young adults are realising their need for personal space and privacy, making living apart from their families the new normal.
This, paired with the latest cooling measures and sky-high resale prices, has forced rental prices to skyrocket beyond imagination. Three years ago, I paid S$3,500 for a 900 sqft penthouse in Newton. Fast forward to today; you can’t find anything in town for anything less than S$5,000. Someone’s spare closet, maybe. Great for landlords, terrible for renters.
An increase in home supply might bring some sweet relief, but until then, the rental market will probably be red-hot and blazing for the next six to nine months.
Will you share your living space with roommates? Let us know in the comments section below.
If you enjoyed this article, check out 7 renters in Singapore share their worst roommate nightmares and 5 renters in Singapore share their tips on screening roommates.
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