Singapore 2026: High Housing & Car Costs Still Squeeze Residents
Singaporeans continue to face significant financial pressures as elevated housing and car ownership costs persist into 2026. Despite a moderation in the pace of price increases in some segments of the property market and an easing of mortgage rates, the overall cost of living, particularly for big-ticket items, remains a primary concern for residents navigating their financial landscapes and making provisions for retirement planning and wealth accumulation.
The latest economic data paints a picture of resilient growth for Singapore, with advance estimates indicating that the Gross Domestic Product (GDP) grew by 5.7% year-on-year in Q4 2025, contributing to a full-year growth of 4.8% for 2025. This robust economic performance, however, is juxtaposed against the backdrop of persistent high costs for essential assets, challenging household budgets across the island.
Housing Market: A Persistent Challenge
The Singapore housing market, both public and private, remains a critical component of the cost-of-living challenge. While there are signs of stabilisation, prices largely remain elevated compared to pre-pandemic levels.
For the private residential sector, prices rose by 3.4% in 2025, marking the slowest annual growth since 2020. This moderation from the 3.9% increase in 2024 is a welcome development, signaling a more sustainable pace of appreciation. In the fourth quarter of 2025, private home prices increased by a modest 0.7% quarter-on-quarter, down from 0.9% in the previous quarter. The Urban Redevelopment Authority (URA) flash estimates indicated that growth in Q4 2025 was primarily driven by landed properties, which saw a 3.5% quarter-on-quarter growth.
Looking ahead to 2026, private home prices are projected to increase by a further 2.5% to 4.5%. This continued, albeit slower, growth is influenced by a forecasted increase in private home completions, with approximately 7,000 units expected to reach Temporary Occupation Permit (TOP) in 2026, up from around 5,200 units in 2025. This increased supply could help moderate the pace of price increases, potentially fostering a “wait-and-negotiate” attitude among buyers.
In the public housing market, the Housing & Development Board (HDB) resale prices showed signs of stabilising towards the end of 2025. The HDB Resale Price Index (RPI) for Q4 2025 remained largely unchanged at 203.6, a significant shift from the 9.7% growth seen in 2024. This marks the first time HDB resale prices have remained stagnant since Q1 2020, with annual price growth plummeting to 2.9% in 2025, the slowest since 2019. Resale volume also saw a notable decline of 18.8% in Q4 2025 compared to the same period a year prior, indicating buyer resistance to high prices or a preference to await better options.
For Singaporeans considering home ownership or upgrading, these trends highlight the importance of prudent long term investment planning. While the market shows signs of easing, affordability remains a concern, making strategic financial decisions crucial.
COE Prices Remain Elevated
Car ownership continues to be an aspiration for many Singaporeans, but the cost of obtaining a Certificate of Entitlement (COE) remains stubbornly high. In the second COE bidding exercise of January 2026, premiums for most car categories saw increases. Category A (cars up to 1600cc & 130bhp, and EV with up to 110kW) closed at S$109,501, climbing by S$7,492. Category B (cars above 1600cc or 130bhp, and EV with more than 110kW) also rose to S$121,634. The Open Category (Cat E), primarily used for larger cars, saw a slight dip to S$120,891 but remained at a high level.
The Land Transport Authority (LTA) attributed these elevated COE premiums to seasonal demand, partly influenced by the Singapore Motorshow and the upcoming Chinese New Year period. The persistent high cost of COEs means that acquiring a new car remains a significant financial outlay for most households, impacting overall disposable income and potentially diverting funds from other important financial goals like investment in Singapore.
Inflation and Interest Rates: The Underlying Pressure
The broader economic environment, characterised by evolving inflation and interest rate dynamics, continues to exert pressure on household finances. The Monetary Authority of Singapore (MAS) projects MAS Core Inflation to average around 0.5% for 2025 and between 0.5% and 1.5% in 2026. CPI-All Items inflation is similarly forecast to be in the range of 0.5% to 1.5% for 2026.
Despite these forecasts, a December 2025 survey revealed that over 80% of Singaporeans expect inflation to increase in the next 12 months, driven by global trade policy uncertainties and geopolitical tensions. Singaporeans projected a one-year-ahead headline inflation of 3.5% in December 2025, up from 3.3% in September 2025.
On the interest rate front, a meaningful shift has been observed. Mortgage rates in Singapore have eased significantly from their 2022 peaks, reaching their lowest in three years. Fixed-rate loans, which were around 3.1% at the start of 2025, have nearly halved to between 1.4% and 1.8% by December 2025. Similarly, the three-month compounded Singapore Overnight Rate Average (SORA), which many floating rate loans are pegged to, fell from 3% in early January 2025 to 1.2% by December 2025. This decline in borrowing costs, influenced by anticipated US Federal Reserve rate cuts and high domestic liquidity, offers some reprieve for homeowners and potential buyers by reducing mortgage payments.
Navigating the Landscape: Implications for Singaporeans
The combination of high, albeit stabilising, housing and car costs, alongside persistent inflationary expectations and easing interest rates, presents a complex financial landscape for Singaporeans. For many, the ability to build wealth and plan for retirement is directly impacted by these significant expenditures.
The moderation in property price growth, coupled with increased housing supply, could present opportunities for homebuyers who have been waiting on the sidelines. However, the overall cost base remains substantial. Savvy Singaporeans are increasingly looking towards strategic investment in Singapore to grow their capital and mitigate the effects of inflation on their purchasing power. Diversifying long term investment portfolios, including considered equity investment where appropriate, becomes even more crucial in an environment where core living expenses absorb a significant portion of income.
For homeowners, the current lower mortgage rates offer a window to refinance loans and potentially reduce monthly outgoings, freeing up capital for savings or further investments. This active management of liabilities is a key aspect of sound retirement planning.
Outlook for 2026 and Beyond
While economic growth in Singapore is expected to moderate to around 3.2% in 2026, the underlying challenges of high asset ownership costs will likely persist. MAS’s monetary policy stance is expected to remain steady, providing flexibility to respond to an uncertain global environment. Global trade policies and geopolitical tensions continue to pose risks to the inflation outlook, which could impact consumer prices further.
In this evolving economic climate, continuous financial literacy and proactive planning are paramount. Singaporeans must remain vigilant, adapting their financial strategies to navigate the ongoing high costs of housing and private transport while strategically pursuing wealth accumulation through disciplined saving and informed investment in Singapore.
