Why Are Local Residents Renting?
What You Need to Know About Renting in Singapore
With Singapore boasting one of the highest homeownership rates globally, one might wonder if locals actually rent. To clarify, a "local" typically refers to a Singaporean who was born and raised here, although this definition is evolving.
Perspectives on Local Renting
- Proximity to Quality Schools: Many parents aspire for their children to excel in life, often believing that attending a reputable primary school provides a significant advantage. This belief drives parents to seek homes near branded schools, as they see it as a way to give their children a head start.
- Returning Locals from Abroad: Many locals returning from long-term overseas assignments may find themselves priced out of the property market due to rising home prices. Having sold their homes at lower prices, they struggle to afford similar properties in the same area.
- Local Executives on Expat Packages: Executives who grew up in Singapore may have homes here but benefit from company-sponsored rental assistance. They often rent out their own properties while living in rented accommodations, effectively generating positive cash flow through rental benefits.
- Avoiding Additional Buyer’s Stamp Duty (ABSD): Some locals sell their homes to upgrade without incurring ABSD on a second property purchase. Given that ABSD can be as high as 12% for locals, many prefer to rent while waiting for new properties, thus saving significant costs.
- Waiting for Market Downturns: A segment of the population may be wealthy and analytical, waiting for property prices to drop before making their next investment. However, this strategy can lead them to miss out on opportunities if the market doesn’t decline as anticipated.
- Financial Difficulties: Lastly, individuals facing financial challenges, such as bankruptcy or significant debt, may find themselves unable to purchase homes and could be among the least desirable tenants. Some locals choose to sell their properties to avoid paying Additional Buyer Stamp Duty (ABSD) on a second home purchase, opting to rent while waiting for new opportunities in the market.
- Renovating Current Homes: Some residents may also be renting while renovating their current homes or waiting for new properties to be completed.
Understanding these dynamics can provide insight into the local rental market and help clarify the reasons behind renting behavior among Singaporeans.
If you are currently a tenant and are willing to consider the newt step such as home ownership, lets talk over a cuppa
