Growth in housing rents should ease in coming quarters: MAS

/ EdgeProp Singapore |
Rental pressures are expected to ease as housing supply picks up, with close to 40,000 private and public homes to be completed in 2023 (Picture: Samuel Isaac Chua/The Edge Singapore)
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SINGAPORE (EDGEPROP) - According to the Monetary Authority of Singapore, rental pressures in the private and public housing markets in Singapore should ease this year, following a period of “exceptional demand-supply imbalance” caused by Covid-19 disruptions which underpinned a surge in rents for the past two years.
In MAS's half-yearly macroeconomic review released on April 26, a section on the residential rental market contributed by the Ministry of National Development notes that HDB and private residential rents have jumped by 38% and 43% respectively since 2021.
The surge in rents was broad-based, with rents growing at similar rates across market segments and housing types. In the private housing sector, rents for landed and non-landed properties rose 28.1% and 29.8% respectively in 2022. For public housing, rents of five-room and three-room HDB flats grew by 29.5% and 24.6% respectively last year. (Find HDB flats for rent or sale with our Singapore HDB directory)
MAS attributes the rapid growth in rents across 2021 and 2022 to “extremely tight” supply conditions, caused by disruptions in the construction industry following the Covid-19 pandemic. Safe management measures implemented also affected the subsequent pace at which construction activity could resume.
As a result, there were severe delays to the completion of private and public residential projects islandwide. According to MAS, the yearly average private and public residential unit completions in 2020 to 2022 was approximately 20,000 units, about 22% lower than the average of around 26,000 units per annum over 2018 to 2019 and about 36% lower than the projected average of roughly 32,000 units per annum over 2023 to 2025.
The supply crunch also coincided with strong demand for rental units in 2021 and 2022. While non-resident rental demand fell during the pandemic, there was strong demand from Singapore citizens and Permanent Residents (PRs) seeking temporary accommodation while awaiting the completion of their residential units.
In 2021, private rental demand from citizens and PRs increased by about 7,000 units, compared to the average annual increase for this group of around 1,300 units in 2018 and 2019. This sharp increase outweighed the fall in non-resident private rental demand in 2021 of approximately 4,200 units.
With the easing of border restrictions in 2022, this trend was reversed and non-resident rental demand recovered quickly. In 2022, the increase in private rental demand from Singapore citizens and PRs fell to about 700 units, while non-resident demand rebounded to an increase of around 2,300 units, similar to 2019. A similar trend was observed in the HDB rental market.
MAS also notes other factors, including robust employment and wage conditions, may have also contributed to the strong pace of market rent increases.
Moving forward, a boost in supply is expected to help alleviate rental market pressure. Close to 40,000 private and public residential units will be completed in 2023, the highest number of annual completions since 2018. “This pace of completion will continue over the next two years, with close to 100,000 public and private residential units in total coming on-stream over the period 2023 to 2025,” MAS adds.
MAS expects rental demand to see some moderation as well. “Looking forward, rental demand from Singapore citizens and PRs could abate as significant residential supply comes on-stream, and as they vacate their rental units to take up occupation of their completed owned units.” Global economic uncertainties and slower growth may also further weigh on sentiments in the rental markets.
Given these factors, supply and demand imbalances in the rental market will likely be resolved. “Such market imbalances have already started to ease and will continue to do so progressively through this year, along with the significant housing supply coming on-stream and an expected moderation in rental demand,” MAS states. As such, MAS anticipates further residential rent increases to ease in the coming quarters.

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