Increased housing supply aims to alleviate rental pressures for private property seekers.
A significant increase in housing supply anticipated for the coming year may help alleviate the rental pressures in Singapore’s private property market, according to a recent report.
Ms. Christine Sun, Senior Vice President of Research & Analytics at OrangeTee, noted in a report dated December 23 that more than 18,000 private homes are scheduled for completion in 2023. This figure does not include executive condominiums (ECs), which are also expected to be completed during the same period.
The private rental market has faced rising rates over the past two years, primarily due to demand significantly outpacing supply. However, the newly completed homes are expected to provide some relief, especially in city fringe areas and suburban locations. “HDB upgraders and Singaporeans awaiting the completion of their new homes may find more housing options available, potentially leading to an increase in suburban homes with affordable rents,” Ms. Sun stated.
Despite these improvements, rental prices are still projected to rise. In 2022, rents increased by an estimated 26% to 28%. This year, the growth rate is expected to slow, with projections of a 13% to 16% increase. “Landlords may be reluctant to reduce rents in light of rising living costs, higher property taxes, and increased mortgage rates,” the report added.
The rental market is also anticipated to tighten in the long run, even with the influx of new housing. Tenants are increasingly signing longer leases of two to three years, while the available rental stock continues to diminish. The public housing sector is expected to follow a similar trend, with HDB rents likely to rise by 15% to 18% in 2023, following an estimated increase of 26% to 28% this year. Ms. Sun added that “escalating home prices and cooling measures may lead some individuals to opt for rentals instead of purchasing new homes.”
