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SINGAPORE : Housing rentals in Singapore have risen faster than property prices, a phenomenon that is unique in this region.
Property analysts have pointed the finger at collective, or en bloc, sales, but they say they are not expecting rents to drop sharply even when the redevelopment projects are complete.
The price of housing in Asia has risen as a whole in recent years. Over in Hong Kong, South Korea and China, property prices have increased faster than rentals but here in Singapore, it is the reverse.
Rentals for private residences in the Republic jumped 10.4 percent in the second quarter, while property prices rose by a more modest 8.3 percent.
Analysts have pointed the finger at collective sales, which quickened in pace in the last 18 months.
Donald Han, Managing Director, Cushman & Wakefield, said: "I think the phenomena of rental increase in residential is purely because of the collective sales fever that you've seen in the last two, three years.
"There has been a lot of the older stock which went under the redevelopment block of the collective sale and there was not enough replacement for the new properties."
The displacement is particularly acute in Districts 9, 10 and 11, where collective sales activities were highest.
Looking ahead, analysts say that investors should expect rents to stabilise or correct downwards once supply comes back.
Colin Tan, Head of Research and Consultancy, Chesterton, said: "I suppose the properties that are being redeveloped when they're completed... prices or rentals will stabilise. Whether they will come down or not will depend on, I suppose, the prospects for the Singapore economy.
"I think there is a lot of talk that more foreigners will be coming due to the added attractions of the F1, integrated resorts. So we have to see. If the demand is good, the correction may be just slight."
Between the second half of this year to 2010, 43,018 private housing units are expected to be completed. - CNA/ch
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