Growth in housing rents should ease in coming quarters: MAS

Citing recent developments in the rental market in Singapore, the Monetary Authority of Singapore (MAS) has reported that rental pressures should begin to ease in the coming quarters. The surge in rental rates witnessed over the past two years—with HDB and private residential rents increasing by 38% and 43%, respectively—had been largely caused by the Covid-19 crisis and the resulting short-term disruptions in the construction industry.

MAS stated that the “extremely tight” supply conditions, when coupled with heightened demand from Singaporeans and Permanent Residents (PRs), had put significant pressure on the rental markets. In fact, private rental demand from citizens and PRs surged by about 7,000 units in 2021, far more than the annual average of 1,300 units in 2018 and 2019.

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However, with the relaxing of border restrictions in 2022, non-resident rental demand recovered, leading to a dampening of rental demand from citizens and PRs. Additionally, MAS has also highlighted robust employment and wage conditions as possible contributors to the above-mentioned increases in rental rates.

Moving forward, MAS anticipates rental pressures to dissipate, with the coming years set to see close to 100,000 public and private residential units being completed. This would lead to a reduction in rental demand from citizens and PRs, while global economic uncertainties and slower growth will also increasingly weigh on sentiment in the rental markets. Thus, MAS expects further residential rent increases to be contained in the months ahead.