Home rents have risen to a seven-year high in Singapore, already one of the world's most expensive cities, even though the city-state's population has dipped in the past two years.

The rental price index of private residential properties increased to 114.2 in the fourth quarter of 2021, up 9.9 percent from the same period a year earlier, according to Singapore government data, as demand outstrips supply that has been hit by construction delays because of COVID-19 curbs.

Shortages of workers and materials because of the coronavirus pandemic has delayed the construction of private condominiums and public Housing Development Board (HDB) apartments.

At the same time, rental demand is rising, which analysts attribute to a range of factors. Some local Singaporeans are renting while they wait for their apartments to be completed, while high property prices have prompted some landlords to sell their units, reducing the rental stock.

Other Singaporeans returned to the country during the pandemic and repossessed homes that were previously rented out.

The vacancy rate of private residential units shrank to 6 percent at the fourth quarter of 2021 from 7 percent a year ago, government data showed. Rents have also risen despite expatriates leaving Singapore amid the pandemic.

Analysts expect rents to rise 8 percent to 12 percent this year, as Singapore loosens border restrictions, allowing more foreigners into the country.

The city-state is also poised to attract workers from Hong Kong (China), which is seeing an exodus of expatriates who are unhappy with its stringent COVID-19 prevention rules.

The hot rental streak is likely to continue for a couple of years until construction catches up, said Christine Sun at real estate consultants OrangeTee and Tie.

The surging property market is adding to the cost of living in Singapore. Inflation has climbed to multi-year peaks this year, while fuel and electricity costs are forecast to spike further.

Source: VNA