A breakneck surge in residential rents hammered Singapore’s tenants with increases of about 21% in the first nine months of 2022 — and the pain looks set to continue this year.
Despite slowing, Bloomberg Intelligence analysts predict rents are set to rise another 10-15% in 2023, driven by the country’s continued economic recovery, as well as resilient employment and household income.
An acute supply crunch and an influx of wealth into the financial hub has meant the country’s property market has largely dodged a global slowdown driven by sharp hikes in interest rates. Data released Monday showed that home sales fell for a third straight month in December to the lowest in almost 14 years, as a lack of units kept buyers at bay.
Still, the market may show early signs of moderation with 18,234 private residential units expected to be built this year, according to Bloomberg Intelligence real estate analyst Ken Foong, using calculations based on data released by Singapore’s Urban Redevelopment Authority in the third quarter. That’s slightly more than double the number of units built last year.
The biggest risks to such an estimate are a possible slowdown in the economy or increased unemployment, said Foong. “But so far, with the consensus forecast of more than 2% GDP growth, resilient employment and household income, this could support the rental growth in Singapore,” he said.
The latest estimates echo an earlier analysis from Singapore-based real estate agency OrangeTee & Tie Pte, which expects private rents to rise between 13% and 16% this year.
The slowing rate is unlikely to provide much cheer to residents. Housing affordability and the cost of living were ranked as the top two issues people want the government to focus on in a recent YouGov poll. –BLOOMBERG