Singapore and the political problem of skyrocketing rents

Bold move by the government

In April, the Singapore government made a bold move to double stamp duty to 60% for foreign home buyers — the highest rate among major global cities — while also taking other steps such as freeing up more land for construction, Bloomberg reported.

While rising rents are said to only affect foreigners because they are less likely to own homes, a survey last year found that two in three Singaporeans aged 22 to 29 choose to rent due to insufficient savings.

However, rents have also risen rapidly over the past year. Data from the Singapore Urban Redevelopment Authority shows that private housing rental costs are expected to rise by nearly 30% by 2022, according to Channel NewsAsia.

Singapore và bài toán chính trị khi giá thuê nhà tăng vọt - Ảnh 1. — Singapore rents soar

Impact on PAP's reputation

A majority of Singaporeans believe the government has not handled inflation well despite recently passing a budget full of subsidies, according to a poll by market research firm Blackbox Research. The approach to housing costs tops the list of grievances. Meanwhile, a YouGov poll in December 2022 found that two-thirds of respondents said the government should focus more on housing affordability.

Housing anxiety could soon play out in political circles. Singapore will elect a new president in September in a largely ceremonial vote that will serve as a test before a general election expected in November 2025.

For the ruling People’s Action Party (PAP), addressing the housing issue has become a pressing issue as it searches for a successor to Prime Minister Lee Hsien Loong, who is preparing to hand over power to the next generation of party leaders. While there is little sign that the PAP will lose power in an election, the party is sensitive to public opinion about the basic needs of its people.

Growing concerns about housing have shaken a pillar of the policy package that has underpinned the PAP’s six decades in power: the subsidized housing program that has helped Singapore achieve one of the world’s highest home ownership rates. While the Housing and Development Board (HDB) scheme has won global acclaim, eligibility for HDB concessions has often favored married couples over young singles.

According to the Department of Statistics, the number of Singaporeans and permanent residents under 35 years old living alone increased from 15,900 in 2019 to 25,000 in 2020 – the year of the pandemic.

The surge in home prices is partly due to a growing shortage of supply after construction activity stalled during the pandemic. While the government has pledged to accelerate new developments, other efforts to address the problem have met with mixed reactions.

Opposition lawmakers have criticized this year’s housing subsidy hike, saying it will send Singapore into a spiral of rising prices. Others have complained that the policy disproportionately benefits couples. Meanwhile, a new pilot program to provide dormitory-style public housing for low-income singles has been likened to prison on social media.

Expectations for solutions to increase housing supply

Singapore looks set to ramp up housing construction to rescue soaring rents.

In a speech last week, Singapore's Finance Minister Lawrence Wong, who is widely tipped to succeed Prime Minister Lee, acknowledged that prices had spiked, but said incomes would keep pace.

Singapore's Ministry of National Development also said that housing subsidy applications have increased significantly and that it has taken steps to update policies to better meet the diverse aspirations and needs of its people.

“We are making good progress in getting the Housing and Development Board’s construction programme back on track,” Singapore’s Ministry of National Development said in response to questions from Bloomberg, adding that it is overseeing nearly 100 projects across the island to meet growing demand.

“As the completions are on track, we anticipate a significant number of local people will leave the rental market and return to their homes,” National Development Minister Desmond Lee told reporters on May 4.

“In addition, some of that supply, especially in the private residential market segment, will provide new supply to the rental market,” Channel NewsAsia quoted him as saying, adding that rents are therefore likely to fall later this year.

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