Singapore’s rental growth is expected to moderate for the rest of this year on more supply and macroeconomic headwinds, providing some respite for tenants struggling with soaring housing costs.

Residential rental growth could slow to less than 5% in the second half, with an overall annual increase of between 10% and 15%, said Bloomberg Intelligence analyst Ken Foong. This comes after an almost 30% jump in 2022 and a 7.2% increase in the first quarter. The market remains underpinned by the city-state’s economic recovery and resilient job market, he said.

Rents and home prices in the financial hub have surged since the pandemic on an influx of wealth, creating a headache for the government to quell discontent among residents. Authorities raised taxes on property purchases in late April, mainly targeting foreign and second-home buyers in a bid to maintain affordability.

The government said earlier this month that it expects signs of easing in the rental market and already sees indications that demand is “abating.” It expects 40,000 home completions this year – the highest in the last five years – and about 100,000 by 2025. Households temporarily renting while waiting for their new homes to be finished will move out of their units, it said.

“While there is still robust demand for rental properties, there are telltale signs that tenants are becoming more resistant to rental price increases,” according to a report by real estate marketplace PropertyGuru. “With supply being slowly restored and the increase in the number of rental listings, rental prices are expected to gradually stabilize.”

Foreigners, who now have to pay an additional 60% tax on a property purchase, would have to turn to renting, said Colliers’ head of research Catherine He. However, this too will be negated by the deluge of new homes coming onto the market, she said.