There are a number of reasons why individuals may choose to rent a home rather than purchase one. For example, some HDB rules and grants make it harder for some individuals to purchase flats. Others may have a hard time getting approved for a home loan, or may prefer to avoid this financial burden altogether. Perhaps based on these factors, renting has become an increasingly popular practice in Singapore. In order to help renters understand the market and find an affordable place to live, we analysed updated rental prices and provided tips on reducing their rental cost.
Rental Prices Vary Significantly by Neighbourhood
As renters might suspect, certain areas of the island are significantly more expensive than others. For example, we found that the median monthly rent for a 4-room HDB flat in Central (S$2,700) is S$1,000 more than in Bukit Panjang and Choa Chu Kang. It is also noteworthy that the median price for 4-room flats in most neighbourhoods is at least S$2,000.
With that said, Bukit Panjang, Choa Chu Kang, Woodlands, Punggol, and Sembawang lead the way in terms of affordability. These areas have median rents ranging from S$1,400 to S$1,500 for 3-room flats, S$1,700 to S$1,800 for 4-room flats, and S$1,800 to $1,900 for 5-room flats. These rates are much lower than other neighbourhoods where median rents reach S$2,150, S$2,700 and S$2,800, respectively.
How Have Rental Prices Changed Since 2018?
Another way for prospective renters to compare different areas is to compare how prices have changed over time. We found the median price of 4-room flats in some neighbourhoods have decreased materially in the last year. For example, homes in Yishun and Marine Parade are about 5% cheaper in 2019 than in 2018. On the other hand, flats in Central have increased by about the same amount.
How to Save Even More on Your Rental Flat
For many individuals and families, even rents in the most affordable neighbourhoods represent a significant financial burden. To help these consumers, we've identified a few easy ways to make renting a little bit more affordable.
Don't Be Afraid to Negotiate
First, while it may be uncomfortable for new renters, it is sometimes possible to negotiate for lower rent with your future landlord. Even if you are able to get your monthly rent down by just S$25-S$50, you'll be able to free up S$300 to S$600 annually for your other necessary expenses or your personal savings. Current renters may be able to negotiate with their landlord to keep their rent steady, or even get a decreased rate if they were very reliable tenants.
Limit Utility Expenses
Additionally, while rental agreements can vary, it is always important to limit the cost of utilities. For example, some landlords will include some or all utility costs in the total rent price. If you are responsible for your utility bills, it is important to make sure that you limit your total costs. For example, it is possible to reduce your electricity bill by purchasing efficient appliances or switching to a more competitive electricity plan.
Consider Renting a Single Room
Finally, individuals that are hoping to find a very affordable place may consider renting a single room for a time, in order to accumulate savings for a larger flat some day. The price of a single room varies quite a bit, but it is not unreasonable to find individual rooms priced between S$700 and S$1,000. Before you sign up for one of these arrangements, make sure that you have met the landlord and your future roommates and that you have a solid lease agreement.