SINGAPORE'S RESIDENTIAL RENTAL MARKET

Abstract

This paper studies Singapore’s residential rental market in depth. It contributes to the existing body of knowledge as it deviates from conventional focus on merely rental transaction and volume; it examines distribution patterns, determinants of rent and concludes if HDB rents are overpriced. In particular, the objectives of this study are to understand the trends and patterns of rental distribution and rates, and to establish a theoretical framework to predict market rents. This could justify the need for policy interventions in the residential rental market, to ensure stability and sustainability. This study postulates that distribution patterns of public rental transactions complement that of the private sector, with determinants of transacted rent having similar impacts in both markets. The first section of the research is conducted with the Geographic Information Systems and descriptive statistics. Following on, two hedonic regression models were used to determine the relationship of different variables on transacted rents. The findings reveal that public rental transactions tend to comprise of larger units, and take place more frequently in mature estates. In contrast, private rental transactions are made up of smaller sized units and are scattered along key roads. This provides insights about rental budgets and travelling behaviors of tenants. Similar determinants are found to be significant for both rental markets, with each variable exhibiting varying impact on transacted rents. This has provided a concrete model to predict residential rents, which can be used to evaluate if market rents are excessive and need to be controlled, by comparing with transacted rents.