Singapore rents hit six-year high, as inflation fuels expatriate housing woes

Construction delays, returning homeowners, and an increased demand for space to work from home all reduced rental stock and pushed tenants into the market

This year alone, some units costing US$1,800 to US$2,900 per month have already seen rental growth of at least 10 per cent to 15 per cent, observers say

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Private residential houses and public housing estates are seen in the Hougang area of Singapore. Photo: Bloomberg

Published: 10:07am, 28 Dec 2021

Singapore residents bemoaning expensive home prices now have something else to worry about: rising rents.

Rents have jumped to a six-year high, and analysts anticipate further increases as demand outweighs supply. That’s adding to costs for residents of the financial hub, especially expatriates, at a time when inflationary pressures are building.

The Covid-19 pandemic can be blamed for much of the gains: a shortage of migrant workers has contributed to construction delays, forcing people to lease while waiting for new flats to be built. Younger Singaporeans have been moving out of the family home in search of more space to work remotely. And homeowners returning from stints abroad are taking back their units, reducing the rental stock and pushing tenants into the market.

An elevated track for Singapore’s Mass Rapid Transit system is seen by public housing estates in the Sengkang area of the city state. Photo: Bloomberg

“At the beginning of the pandemic, people expected a high probability of deflation setting in,” said Alan Cheong, executive director of research at Savills Plc. “But who would have anticipated the opposite, an endemic inflation that’s now the talk of the town.”

Apartments costing S$2,500 to S$4,000 (US$1,800 to US$2,900) in monthly rent may face the greatest upside pressure amid high demand, Cheong said. This year alone, some units have already seen rental growth of between 10 per cent to 15 per cent, at least.

The central bank has also sounded a note of caution. Home rentals jumped 7.1 per cent in the first nine months of 2021, thanks to a drop in vacancies, the Monetary Authority of Singapore said in its Financial Stability Review this month. While supply is still somewhat adequate, “further declines in the vacancy rate could trigger a sharper increase in rentals,” the central bank said.

An index of rental prices jumped to 111.3 in the third quarter of 2021, the highest since the first three months of 2015, Urban Redevelopment Authority figures show.