15 Years of Sengkang HDB Rental Income Data. What Does it Tell Us?

I was doing some personal financial planning, and part of the planning required me to sense how well a flat in Sengkang rents for.

So I decided to crunch some data and since I did it, I might as well show you here.

The table below shows the average rent declared to HDB from 3rd quarter 2007 to 4th quarter 2022:

This means we have about 15 years of historical Sengkang rental data. During this period, we went through a lot.

I won’t make much comment. Just take a look at the rental data.

In the table above, I have listed out the rent from the highest (max) to median (50th percentile) to the lowest (min).

In the chart below, I plotted the rent over time, with the top chart for 4-room HDB, middle chart is the 5-room HDB and the last chart is the year-on-year change in CPI:

Not sure what your thoughts are.

The CPI includes housing as an input, so I don’t think it is a CPI is high, which is why rent is high. Most likely it is the other way around.

If there is a takeaway, it is that inconsistent is the constant:

1. A person banking on his $1,600 a month 5-room rental income in Sep 2007 to pay for what he needs will be very happy that the income eventually climbs to $2,500 a month. The income will eventually go down to $1,900 a month for a number of years before his rent doubling to $3,000 a month.
2. A person planning to retire with $2,500 a month in Sep 2012 will face cash flow constrain when the income eventually fell to $1,900 a month, or 24% less.
3. If you are putting in some margin of safety in your planning for your retirement, how much buffer should you put in so that in the “unlucky” situation, you can still pay for what you need? Would 10% buffer be enough? or 20%, or 30%?
4. The retiree who plans around the rental income in Oct 2019 will get a pleasant surprise when income rose 50% to $3,000 a month.
5. The $2,500 a month high for a 5-room flat will only be revisited 10 years later!
6. Despite all these income fluctuations… inflation consistently goes up, except for some mild deflations. The Sep 2012 retiree planning around $2,500 a month will see his income drop to $1,900 monthly. Despite the income drop, the prices of what he needs continue to go up.

You can replace the Sengkang HDB data with other data, but I am quite sure the constant is inconsistent income.

So right now… the market rent for a 5-room HDB is $3,000 a month.

If I am planning to quit my job and solely depend on the HDB rental for income, how much can I spend so that my income plan is sustainable? Do I spend just $2,000 a month which gives me a 30% margin of safety?

Do I assume that “this time is different”, that the Singapore rental landscape has changed, and income will just keep going up?

The lazy answer would be: “This is why you cannot depend on one income stream, you will need your spending income to come from various sources!”

Your income is from different sources, but if all the sources are going to be inconsistent, you will still get the same problem isn’t it? Perhaps it is more nuance such as “If my rental income falls 30%, my dividend income can make up that 30% easily!”

This is something for you to ponder about.

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