Singapore's rental price growth has slowed down in the second quarter, with the smallest gain in private residential prices since 2021. The cooling trend is expected to continue as more new housing units become available, leading to a higher supply of private housing completions this year. Government interventions, including cooling measures and increased stamp duties for foreigners, have also played a role in alleviating the surge in rents. The high-end market, especially the ultra-luxury segment, has experienced a major reversal, with rents dropping in contrast to the previous quarter's increase.
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Singapore has experienced a slowdown in rental price growth during the second quarter, marking a departure from the prolonged period of expansion that had been impacting affordability and posing a threat to its status as a financial hub. According to the Urban Redevelopment Authority, the index of private residential prices increased by 2.8 per cent, which is the smallest gain recorded since 2021.
This cooling trend is anticipated to continue as more new housing units become available, with approximately 20,000 private housing completions expected this year, the highest annual supply since 2017. Government interventions have also played a role in alleviating the surge in rents that has affected tenants, including expatriates with accommodation allowances, leading them to reassess their leasing options.
According to Knight Frank, island-wide leasing contracts for private apartments in the past three months were at their lowest level since the beginning of the pandemic, with April and May volumes showing a decline of 9.2 per cent compared to a year ago.
The high-end market, particularly the ultra-luxury segment, has experienced a major reversal. Rents in the ultra-luxury category dropped by almost 4 per cent in the second quarter, in contrast to the 9 per cent increase seen in the previous quarter, based on Knight Frank’s analysis.
Based on Knight Frank’s examination of Urban Redevelopment Authority data, the government’s recent cooling measures, which involve doubling stamp duties for foreigners to 60 per cent, have deterred potential investors and led to reduced demand for luxury rentals.
During the pandemic, Singapore largely bucked the global property slowdown, benefiting from an influx of wealth from China and other countries that fuelled the market. Singapore previously shared the title of the city with the fastest pace of rental growth with New York but has now slipped to the second spot.
Moreover, the issue of rising rental costs has become a political concern, with expatriates being more severely impacted by rental increases, as they are less likely to own homes.
Last year’s survey indicated that two out of three Singaporeans aged 22 to 29 opt to rent due to insufficient savings. A recent YouGov poll found that over half of the respondents believe the government should take more action to regulate rents and provide additional support based on income.
According to a report from real estate portal SRX, rents for private apartments rose by 0.3 per cent in June compared to the previous month. Mark Yip, the CEO of property agency Huttons Group, anticipates that rents for private apartments will increase by 10 per cent to 15 per cent this year, which is a moderation from the nearly 30 per cent surge seen in 2022.
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