Singapore’s rental growth expected to moderate for the rest of this year
Leasing market slows down
Singapore's rental market is expected to see a slowdown in growth for the remainder of the year, offering some relief to tenants grappling with high housing costs. The increased supply of rental properties and macroeconomic challenges are anticipated to moderate rental growth.
Bloomberg Intelligence analyst Ken Foong suggests that residential rental growth may drop to below 5% in the second half of the year, resulting in an overall annual increase ranging between 10% and 15%. This follows a significant 30% surge in 2022 and a 7.2% increase in the first quarter. The market continues to benefit from Singapore's economic recovery and a resilient job market.
Rising rents and home prices have posed a challenge for the government as it strives to address concerns among residents. In late April, authorities implemented higher taxes on property purchases, primarily targeting foreign and second-home buyers, with the aim of maintaining affordability.
The government recently stated its expectation of signs of easing in the rental market and observed early indications of declining demand. It predicts approximately 40,000 home completions this year, the highest in the past five years, and estimates around 100,000 completions by 2025. As households awaiting the completion of their new homes move out of their temporary rental units, it will contribute to a shift in demand.
PropertyGuru, a real estate marketplace, highlights that while demand for rental properties remains strong, tenants are displaying increased resistance to rental price hikes. With the gradual restoration of supply and a rise in rental listings, rental prices are expected to stabilize over time.
As a result of the additional 60% tax on property purchases imposed on foreigners, Colliers' head of research Catherine He suggests that they may turn to renting. However, the influx of new homes entering the market will offset this demand, according to her analysis.
Source: Bloomberg
