SINGAPORE residents bemoaning expensive home prices now have something else to worry about: rising rents.

Rents have jumped to a six-year high, and analysts anticipate further increases as demand outweighs supply. That’s adding to costs for residents of the financial hub, especially expatriates, at a time when inflationary pressures are building.

The COVID-19 pandemic can be blamed for much of the gains: a shortage of migrant workers has contributed to construction delays, forcing people to lease while waiting for apartments to be built. Younger Singaporeans have been moving out of the family home in search of more space to work remotely.

And homeowners returning from stints abroad are taking back their units, reducing the rental stock and pushing tenants into the market.

“At the beginning of the pandemic, people expected a high probability of deflation setting in,” said Alan Cheong, executive director of research at Savills Plc. “But who would have anticipated the opposite, an endemic inflation that’s now the talk of the town.”

Apartments costing S$2,500 (US$1,800) to S$4,000 in monthly rent may face the greatest upside pressure amid high demand, Cheong said. This year, some units have already seen rental growth of at least between 10 percent and 15 percent.

The central bank has also sounded caution. Home rentals jumped 7.1 percent in the first nine months of 2021, thanks to a drop in vacancies, the Monetary Authority of Singapore said in its Financial Stability Review earlier this month. While supply is still somewhat adequate, “further declines in the vacancy rate could trigger a sharper increase in rentals,” the central bank said.

An index of rental prices jumped to 111.3 in the third quarter of 2021, the highest since the first three months of 2015, Urban Redevelopment Authority figures show.

Singapore is tied with Paris as the world’s second-most expensive city, according to the Economist Intelligence Unit. (SD-Agencies)