Increases in home rents to ease in 2023, sharp rise last year 'exceptional': MAS

Rental pressure for both private and public housing is expected to ease this year after rising sharply since 2021 on an exceptional supply-demand imbalance.

Extremely tight supply conditions resulted from pandemic-induced delays to completions of housing projects. Rental demand in 2021 and 2022 was strong as residents sought temporary accommodation and non-resident demand recovered after Covid-19 border restrictions were eased in 2022, the Monetary Authority of Singapore (MAS) said on Wednesday (April 26).

The tightness is expected to ease this year with significant housing supply coming on stream. 

In 2021, private rental demand from Singaporeans and permanent residents (PRs) increased by about 7,000 units, compared to the average annual increase of about 1,300 units in 2018 and 2019, said MAS.

Among non-residents, private rental demand in 2021 fell by about 4,200 units. 

With the easing of border restrictions in 2022, the trend reversed, as non-resident demand rebounded to an increase of 2,300 units, while for Singaporeans and PRs the increase fell to about 700 units.

Data from SRX and the Urban Redevelopment Authority showed that HDB residential rents rose by 38 per cent since 2021, while private residential rents were up 43 per cent within the same period.

The sharpest year-on-year increase for both private and public rents took place in 2022, with private property rental prices rising by 29.7 per cent and HDB rents increasing by 27.6 per cent. 

Between 2020 and 2022, there was an average of 20,000 private and public residential units completed, 22 per cent lower than before the pandemic – when 26,000 units were completed on an average annual basis between 2018 and 2019.

“Such market imbalances have already started to ease and will continue to do so progressively through this year,” said MAS.

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Last year, the outside central region (OCR) had the largest yearly increase in rents of 31.8 per cent, followed by the rest of central region and core central region. For the whole of 2022, rentals of landed properties increased by 28.1 per cent.

In 2022, rents increased for all types of public housing, with the largest increase among executive units – up 31 per cent.

MAS expects that about 32,000 public and private residential units will be completed per year on average between 2023 and 2025.

In the private residential market, 8,000 private residential units were completed in the last two quarters, double the average completions of about 2,000 units per quarter in 2021 and 2022. 

HDB is also on track to complete another 20,000 flats in 2023 – close to triple the 7,000 flats completed in 2020, during the pandemic.

As significant housing supply comes on stream, Singaporeans and PRs are likely to vacate their rental units to take up occupation of their completed owned units, said MAS. 

This article was fiirst published in The Business Times.