According to the Monetary Authority of Singapore (MAS), rental pressures in both private and public housing markets in Singapore are expected to ease in the current year due to the exceptional demand-supply imbalance caused by the Covid-19 disruptions. MAS’s half-yearly macroeconomic review released on April 26 stated that HDB and private residential rents have risen substantially since 2021, by 38% and 43% respectively.

MAS attributes the large jump in rents to the particularly tight supply conditions, which were caused by disruptions in the construction industry as a result of Covid-19 and by the safe management measures implemented. There was an average of 20,000 annual private and public residential unit completions between 2020 and 2022, which was 22% lower than the average of 26,000 units per annum between 2018 and 2019, and 36% lower than the projected average of 32,000 units over 2023 and 2025.

At the same time, 2021 and 2022 saw strong demand for rental units, with an increase of 7,000 units in rental demand from Singapore citizens and Permanent Residents (PRs) in 2021, as these individuals looked for temporary housing while awaiting the completion of their own residential units. Meanwhile, non-resident private rental demand dropped by 4,200 units in 2021.

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However, in 2022, the trend reversed, with Singapore citizens and PRs’ private rental demand going down to around 700 units and non-resident demand rebounding to an increase of 2,300 units – similar to the trend seen in 2019. A similar pattern was evident in the HDB rental market.

Robust employment and wage conditions have also been noted as likely contributors to the rise in market rents. Supply is expected to rise significantly, with close to 100,000 public and private residential units set to come on-stream in the 2023-2025 period and rental demand should see some moderation too.

Given these factors, MAS expects rental market imbalances to be resolved over the coming quarters, with rental increases expected to ease progressively.