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Measures to Combat High Rental Costs in High Interest Rate Environment and Market Uncertainties

Debated in Parliament on 7 Aug 2024.

Summary

  • The government is addressing high rental costs by significantly increasing housing supply, with nearly 100,000 residential units expected to be completed between 2023 and 2025.
  • Support programs like the Public Rental Scheme and Parenthood Provisional Housing Scheme are in place to assist low-income renters, with financial vouchers available for eligible families.
  • The occupancy cap for larger HDB flats and larger private residential properties has been temporarily relaxed, allowing for more unrelated tenants and increasing rental supply.
  • Recent data indicates that private housing rents are stabilizing, having declined for three consecutive quarters, while HDB rents remain stable.
  • An increase in commercial space supply is anticipated, with around 599,000 sqm expected to be completed in 2024 and 2025, leading to stabilization in commercial rents as well.

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Full Transcript

Christopher de Souza

Mr Christopher de Souza asked the Minister for National Development what measures are in place to combat high rental costs for both residential and commercial purposes in the current high interest-rate environment and amidst market uncertainties.

Desmond Lee

The Government has undertaken a broad suite of measures to ease rental pressures in the residential property market.

First, we ramped up housing supply significantly. Close to 100,000 public and private residential units are expected to be completed from 2023 to 2025. These will help to cater to housing demand, including for rentals. As households that are temporarily renting move into their new homes, the rental units freed up will help meet rental demand.

Second, to support Singaporeans who need to rent, Housing and Development Board (HDB) offers schemes such as the Public Rental Scheme for low-income Singaporeans with no other housing options, and the Parenthood Provisional Housing Scheme (PPHS), which provides interim housing to eligible families awaiting the completion of their Build-To-Order flat. PPHS-eligible families renting an HDB flat or bedroom from the open market can also apply for the PPHS voucher of $300 per month to defray the cost of their rental. The scheme applies to tenancies that start between 1 July 2024 and 30 June 2025.

Third, the Government has temporarily relaxed the occupancy cap for four-room and larger HDB flats, and private residential properties of at least 90 square metres (sqm). From 22 January 2024, these accommodations are allowed to house up to eight unrelated persons, up from the previous cap of six unrelated persons. This has increased overall rental supply and helped to ease rental pressures.

With these measures, private and public housing rents have shown signs of stabilising. In the second quarter of 2024, private housing rents fell for the third consecutive quarter by 0.8% and have cumulatively declined by 4.8% since the peak in third quarter of 2023. Meanwhile, median rents of 4-room and larger HDB flats have remained stable for two consecutive quarters.

Supply of commercial space has also increased in recent years, which has eased rental pressure. Around 599,000 sqm of commercial space (of which 402,000 sqm is for office use) is expected to be completed in 2024 and 2025. This is about twice the amount of commercial space completed in 2022 and 2023, and will help to cater to rental demand.

As a result, commercial rents have also stabilised. Office rents increased by 1.3% in the first half of 2024, a significant moderation from the 5.2% increase in the second half of 2023. Meanwhile, retail space rents were broadly unchanged in the first half of 2024 and are currently around 22% below the pre-COVID level in end-2019.

We will continue to monitor the situation closely and will adjust our policies as necessary.