Singapore may vote on soaring rent as locals feel real estate price pinch

Singapore's Finance Minister Lawrence Wong said, in Singapore, the prime minister has to be a real estate agent while acknowledging that prices have soared

-By Philip J. Heijmans and Sing Yee Ong

Expats aren’t the only ones feeling the pinch of rents in Singapore rising at the fastest pace in the world. 

The pain is trickling down to young singles like Sonam who are largely shut out of the nation’s subsidized housing program and starting to question the government’s resolve to tackle the problem. The 33-year-old tech worker, a life-long supporter of the ruling People’s Action Party, moved to Thailand after her landlord raised her rent by 70% for a two-year lease. She plans to support the opposition in the next election. 

“We’re all moving out in our early ‘20s and now there’s this: ‘oh, just go back home’” to your parents, Sonam said from Bangkok, declining to give her last name for fear of losing her job. “The fact that they’re so unaware of what is really happening to millennials and what we need to be able to survive in Singapore — it’s just bizarre to me.”

For the PAP, solving the housing problem is crucial as the party navigates succession as Prime Minister Lee Hsien Loong, son of the nation’s founding father, is preparing to hand power to the next generation of party leaders. The party had its worst showing in the 2020 vote despite winning 89% of parliamentary seats, prompting Lee to say that policies must reflect the younger generation’s “significantly different life aspirations and priorities.”

Top leaders are growing concerned. Last month the government announced a bold move to double the stamp duty to 60% for foreigners buying homes — the highest levy among major global cities — while taking other steps such as releasing more land for construction.

“To have such steep increases for foreigners certainly point towards the ruling party starting to build its narrative” for the vote, said Nydia Ngiow, a managing director at BowerGroupAsia, a policy advisory firm. “This adds to the speculation that the elections could be held earlier than 2025.”

In a national address last week, Finance Minister Lawrence Wong — who is positioned to succeed Lee — acknowledged that prices have soared, but said incomes have kept pace. 

“In Singapore, the prime minister has to be a real estate agent,” he said. “So I’m learning and brushing up my skills.” 

Growing anxieties over property strike at a pillar of government policy dating back to the 1960s that has buoyed six decades of PAP rule: The provision of subsidized housing to about 80% of the population, giving Singapore one of the highest home ownership rates in the world. While the Housing & Development Board program has won plaudits around the globe, its eligibility rules generally favor married couples over young singles like Sonam.

The Ministry of National Development said there was a significant surge in applications for subsidized housing, and that it’s taken steps to update policies “to better meet” the diverse aspirations and needs of its population.

“We are making good progress towards getting the HDB building program back on track,” the ministry said in response to questions from Bloomberg, adding that it’s overseeing almost 100 projects island-wide to meet the growing demand.

Singapore has largely defied a global property slowdown as an influx of wealth from China and other countries fans the market. Home prices have jumped for 12 straight quarters, even as they decline in cities from Hong Kong to London. 

With so many people priced out of the market, demand for rentals has soared. Rents for private apartments and public housing surged about 32% and 27% respectively in March from a year earlier, though landlords often demand more. Singapore has topped New York with the world’s fastest pace of rental growth for high-end properties.

While the rental hikes have impacted expats more acutely since they are less likely to own homes, a survey last year showed that two in three Singaporeans between the ages of 22 to 29 are choosing to rent due to insufficient savings. 

Belle, a Singaporean content creator renting a shared flat, would like to see a cap on rent increases. She too is considering voting for an opposition party after previously supporting the PAP.

“We all know that Singapore is a very comfortable, reliable country to live in,” said Belle, 28, who didn’t want her last name used. “But it is just a little sad that it doesn’t seem like the government’s really changing its course and there are no safeguards to managing the rental increases.”

Singapore’s subsidized housing program provides some refuge from the soaring prices. The median price of an HDB resale unit is just S$539,000 ($406,000), compared with S$1.48 million for a private condo, according to Cushman and Wakefield Plc.

Though popular, the flats have strict eligibility criteria. Singaporean families and married couples generally qualify for a new HDB apartment from age 21, while singles generally aren’t eligible until they hit 35. That rules out buyers like Sonam, though young singles can tap into the resale market. Gay couples do not get the same benefits as those in recognized marriages. 

The angst over housing may soon play out in politics. Singapore will elect a new president by September in a vote for a largely ceremonial role that will test the nation’s mood ahead of a general election that must be held by November 2025. 

While there’s little indication the PAP would lose power in an election, the party is sensitive to popular sentiments on bread and butter issues. Even a marginally poorer showing would be seen as a sign of weakness for a government that’s relied on unassailable support at the polls.

Though Singapore recently passed a budget full of hand outs, a majority of residents think it hasn’t handled inflation well, according to a poll by Blackbox Research. Its approach to housing costs are at the top of the grievances list. Meanwhile, a YouGov poll in December found that two-thirds of respondents said the government should place greater focus on housing affordability.

“The PAP still have a lot to do in terms of assuring Singaporeans that Singapore remains a very good place to live, work and to raise a family — and that the Singapore dream is still very much alive,” said Eugene Tan, a political analyst and law professor at Singapore Management University. 

The soaring home prices partly stem from a broader supply shortage after construction ground to a halt during the pandemic. While the government has since pledged to speed up new developments, other attempts to solve the problem have been met with mixed reactions. 

Opposition lawmakers were critical of a housing grant increase this year, saying it would set Singapore off on a continuous price spiral. Others complained the policy disproportionately benefits couples. A new pilot program offering hostel-like public housing for low-income singles was meanwhile likened on social media to prisons. 

Sonam, the tech worker, would like to see the government lower the HDB age requirement for singles. A Workers’ Party lawmaker last year proposed dropping it to 28. 

The housing market may soon cool as new units come online, with almost 40,000 public and private completions due this year alone. Prices in the private market are expected to rise about 2% to 3% in 2024, only slightly higher than the pre-pandemic rate of 1.3%, said Wong Xian Yang, Cushman & Wakefield’s head of research for Singapore and Southeast Asia. 

Even with the latest stamp duty increase, Sonam remains unconvinced. 

“It still doesn’t take away the lack of housing,” she said. “It still doesn’t take away that our only option now is to buy a shoebox at a crazy price or rent.”

--With assistance from Kevin Varley.