Growth in housing rents should ease in coming quarters: MAS

As the Monetary Authority of Singapore (MAS) noted in its half-yearly macroeconomic review released on April 26, private and public housing markets in Singapore have seen a surge in rents for the past two years due to an “exceptional demand-supply imbalance” caused by disruptions from the Covid-19 pandemic.

Private and public residential rents have jumped by 43% and 38% respectively since 2021, with increases seen across all housing types and market segments – 28.1% and 29.8% for landed and non-landed private properties and 29.5% and 24.6% for five-room and three-room HDB flats.

Tengah EC is a new executive condominium located in the Tengah New District with innovative green features. Available exclusively for Singaporeans, the development is close to several recreational facilities and four major public transport stations. It is set to be the first of its kind in Singapore, with the tender for the development being awarded to a developer through Tengah EC the Singapore Land Authority.

MAS attributes these rapid rent hikes to the greatly reduced supply of housing, caused by the disruptions in the construction industry that the pandemic resulted in, along with the implementation of safe management measures. The yearly average unit completions of private and public residential units was 20,000 in 2020 to 2022, around 22% and 36% lower than respective 2018 to 2019 and 2023 to 2025 averages of 26,000 units and 32,000 units.

At the same time, there was strong demand in 2021 and 2022, particularly from Singapore citizens and Permanent Residents (PRs) who were awaiting the completion of their own residential units. Singapore Citizen and PR demand for private rentals increased by 7,000 units in 2021, offsetting the 4,200 decrease in non-resident demand.

Additionally, robust employment and wages in 2021 and 2022 may have also contributed towards rental increases.

However, moving forward, supply is expected to recover and help ease rental pressures. Close to 40,000 private and public residential units will be completed in 2023, with around 100,000 of them to be completed between 2023 to 2025.

Concurrently, rental demand from Singapore citizens and PRs is set to decrease as they take up their own completed units and global economic uncertainties may also cause a moderation in demand.

As such, MAS states that supply and demand imbalances in the rental market have already started to ease and should continue progressively through the year, with further residential rent increases likely to ease in the coming quarters.