Measures to Combat High Rental Costs in High Interest Rate Environment and Market Uncertainties
Ministry of National DevelopmentSpeakers
Summary
This question concerns measures to address rising residential and commercial rental costs, as raised by Mr Christopher de Souza. Minister for National Development Desmond Lee explained that residential supply is being ramped up with 100,000 units expected by 2025, supported by the $300 Parenthood Provisional Housing Scheme voucher. He noted that relaxing occupancy caps for larger properties has helped private rents decline by 4.8% since their 2023 peak. Regarding commercial space, supply is set to double in 2024 and 2025, which has moderated office rental growth and kept retail rents stable. The Government continues to monitor these trends closely to adjust policies as necessary for market stability.
Transcript
31 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.
Mr 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.