Why Are Rental Prices Going Up in Singapore?
“Am I paying a good rental rate if I take this unit? Why are rental prices going up in Singapore?” If you have been checking listings recently, you have probably asked yourself this more than once. Rental prices in Singapore have been climbing steadily for years, and even now in 2026 they are still not cheap. So why are rental prices going up, and will they ever come down?
Based on my personal viewpoint, I have a few reasons for high rental to share with you. My viewpoint is neither representing my company‘s viewpoint nor constituting a basis for any projects. You surely can have your own discretion to agree or disagree with it!
What is the relationship between inflation and rental prices?
To understand better, we must dive into some facts. In the economic context, the most direct factor behind rental prices going up is the demand for properties. The higher the demand, the higher the prices.
Remember 2022 and 2023? Inflation in Singapore shot up across all sectors back then, and core inflation even hit 5.5 per cent in early 2023, the highest in more than a decade. Food, electricity, gas, transport, everything became more expensive at the same time.
The good news is that things have cooled down a lot. Based on the latest figures from the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI), core inflation eased to around 1.4 per cent in April 2026, while overall inflation came in at about 1.8 per cent. MAS expects inflation to average around 1.5 to 2.5 per cent for 2026. So prices are still rising, just at a slower pace than before.
But here is the thing about inflation and rental prices: even when inflation cools, rents seldom drop back to where they were. Landlords’ costs like property tax, maintenance fees and mortgage payments already went up during the high-inflation years, and these costs get passed on to tenants. Have a look at the following table on the changes of the Consumer Price Index (CPI) for some sectors.
To curb inflation, central banks raise interest rates, which is exactly what happened worldwide from 2022. Higher interest rates result in higher mortgage rates. It also means it is more expensive to borrow money. As the theory goes, when borrowing is expensive, you, as a consumer, will tend to hold back on buying a property. Instead, you rent first and wait.
Assuming the majority also has the same thought as you, it will only create an upsurge in demand for the rental market.
Higher demand for renting properties will cause higher rental prices. So, this explains why the rental prices you have been paying, or are about to pay, keep getting higher.
3 other situations that push up the rental prices of residential properties
Construction’s pace
Can you list down the other factors that led to higher demand for renting properties? Yes, one big factor was the delay in construction during COVID-19. Many people bought a BTO flat or a new launch condo before the pandemic, then had to wait much longer than usual for their keys.
Construction has largely caught up by now, but BTO waiting times are still around three to four years for most projects. If you want to start a family with your life partner, you would not want to put your plans on hold for so long. So what do most couples do? They rent a place first while waiting for their flat to be ready. Multiply that by thousands of couples every year, and you get steady rental demand.
Foreigners in Singapore
During the pandemic, borders were closed and many expats simply extended their stay in Singapore, which kept rental demand up. Today the situation is different but the effect is the same: borders are fully open, the foreign workforce is back in force, and global companies keep setting up their regional headquarters here. Every new expat or work pass holder who lands in Singapore needs a roof over their head from day one, and almost all of them rent.
Singaporeans residing overseas
Now, let’s look at Singaporeans staying overseas. During the pandemic years, tight border restrictions, expensive flight tickets and vaccination requirements made it very hard for overseas Singaporeans to come home and visit friends and family.
Because of these challenges, many Singaporeans decided to move home permanently. In 2020 alone, the number of Singaporeans staying overseas fell to 203,500 from 217,200 the previous year. Many of these returnees did not have their own HDB or condo to move into, so in the short term the rental market was the most accessible option. Quite a number of them settled back for good.
What about commercial properties? Are shop rentals going up too?
Yes, commercial rents are climbing as well. During COVID-19, lockdowns and Safe Management Measures pushed many business owners to open online shops. They received substantial orders and needed shophouses and warehouses to store their products, so the demand for commercial properties increased.
Fast forward to today: crowds are fully back at malls, MRT stations and bus interchanges, and retail rents have been rising again. Island-wide prime retail rents are hovering around $29 per square foot a month, with Orchard Road at about $31.70 psf, and analysts expect another 2 to 4 per cent increase in 2026. So whether it is a home or a shop, the story is the same — rental prices going up across the board.
Another point worth mentioning is that many global companies continue to invest and set up their offices in Singapore. Once again, this contributes to the increased demand in the rental market.
Now you can understand why the demand to rent properties has never really reduced, while the supply of rental properties has not increased much. Thus, it is not surprising that rental prices have never truly gone down.
If you are running a business now, or planning to start one, you definitely need a shop or a space, be it on a short-term or long-term basis. Feel free to approach us for a quotation. We have shops and spaces in multiple locations, and one of them will definitely suit your business needs! We look forward to assisting you in your business.