Higher work pass salary thresholds for foreigners won’t dent housing market, AI push can power private home prices

[SINGAPORE] Did Budget 2026 deliver bad news for the housing market? 

While there are no additional property cooling measures and property taxes were not raised, some market watchers think the increase in minimum qualifying salaries for Employment Pass (EP) and S Pass applicants – which was unveiled in Budget 2026 – may hurt housing rental demand, should higher business costs lead employers to trim hiring of foreigners.

The EP minimum qualifying salary for new applicants will be raised to S$6,000 from S$5,600 from January 2027. For the financial sector, the EP minimum qualifying salary will rise from S$6,200 to S$6,600.

For new S Pass applicants, the minimum qualifying salary will increase to S$3,600 from S$3,300, and to S$4,000 from S$3,800 for the financial sector.

Qualifying salaries for older EP and S Pass holders will be raised in tandem, with renewal applications affected from 2028. 

As at June 2025, there were 201,200 EP holders and 177,600 S Pass holders based on the Ministry of Manpower’s data.

Should the higher salary thresholds for new applications and renewals of EPs and S Passes make employers more resistant to hiring foreigners, this might dampen leasing demand of Housing & Development Board (HDB) homes and mass market condos in particular. Any weakness in housing rents can have an adverse knock-on effect on home prices.

Nonetheless, I think the hiking of minimum qualifying salaries for EPs and S Passes will have negligible impact on rental housing demand, and Budget 2026 may actually be highly positive for the residential property market’s long-term prospects.

Rental demand

One, leasing demand for homes here comes from diverse sources.

Think of foreign students studying in educational institutions here. The city-state is well-connected, safe and has highly ranked academic institutions. Indeed, should Singapore’s attractiveness to international students rise, this will boost rental housing demand. 

With its stability and growing stature as a wealth management hub, many rich Asians seek to migrate to Singapore.

Foreigners, who are waiting to obtain Singapore citizenship or permanent resident (PR) status, can be a rich source of rental housing demand, especially in the high-end segment. A non-PR foreigner pays substantially higher additional buyer’s stamp duty versus a Singapore citizen or PR when buying a home. 

In addition, many locals lease homes. This includes those who are waiting for their new homes to be ready, relocating back to Singapore, renovating their existing home or moving to live near a sought-after primary school.

Two, Singapore remains keen to attract global skills and talent. Foreigners can strengthen the workforce here, transfer knowledge and help companies grow, thereby creating more and better opportunities for Singaporeans. 

As the Republic’s economy transforms and supports increasingly high value-add activities, the demand for foreign talent in the workforce will invariably gravitate towards more highly productive and higher-earning individuals.

Meanwhile, as the cost of living in Singapore can be high, many foreigners may only work here when wages are competitive to support a certain standard of living.

In short, even if salary thresholds for work passes for foreigners were left unchanged, foreigners in the workforce may increasingly comprise those who are more highly skilled and well-remunerated.

As EP and S Pass salary thresholds have been raised periodically in the past, businesses will likely not be surprised at the latest increases in Budget 2026. 

Where specialised foreign talent is needed, expect businesses in their pursuit of growth to continue sponsoring new applicants for work passes despite the higher minimum salary requirements.  

Buying sentiment

Three, raising the cost of hiring foreigners might, at the margins, make employers work harder to recruit and train local talent as well as reward locals with fatter pay packages.

By being strict with issuing and renewing EPs and S Passes for foreigners, locals may enjoy better job security and prospects. All this can make locals more confident in upgrading their homes and taking on multi-year mortgages.  

Budget 2026 is replete with measures to support lifelong learning for Singaporeans and upgrade their skills. 

Amid technological disruptions, the nation’s overall approach to stay open to foreign talent who strengthen the economy, while ensuring that locals – many of whom are highly educated – remain at the centre of the workforce will help Singaporeans adapt to changes with confidence.

If locals have confidence in the future, this bodes well for the private housing and HDB resale markets as positive sentiment buoys demand.

AI ambitions

Four, looking further out, what is truly exciting for the housing market is the city-state’s ambitions to harness artificial intelligence as a strategic advantage. Accelerating AI adoption across the economy featured prominently in Budget 2026.

AI can help Singapore overcome structural constraints such as limited natural resources, a rapidly ageing population and a tight labour market.

The Republic is looking to deploy AI effectively, responsibly and quickly. It aspires to be a trusted hub where companies and researchers come together to develop, test and deploy impactful AI solutions. 

As it stands, many firms including Google and Microsoft have set up AI centres of excellence here. More companies may set up hubs for AI activities and increase their AI-related investments in Singapore.

Singapore’s push to harness AI is given the utmost priority. A new National AI Council is being established to provide strategic direction and to drive the nation’s AI agenda. Prime Minister and Minister for Finance Lawrence Wong will chair this council.

Certainly, AI may destroy many white-collar jobs and hurt the creation of entry-level jobs for fresh graduates. Without a good job or a stable job, buying a home can be challenging.

Still, might Singapore be able to get a larger share of a possibly shrinking pool of white-collar jobs globally?

Importantly too, private housing here caters largely to higher-income earners. While AI’s effect on overall job creation may be negative, it could accentuate the earnings of top performers across various sectors.

In short, should Singapore excel in harnessing AI, top global and local talent here could thrive. What this might translate to is strong buying and leasing demand for private homes.

In a housing market with ample new supply, landlords will need to be sharp in positioning their properties for rent.

Still, there are diverse sources of residential leasing demand. Singapore’s openness to drawing global talent means the workforce should continue to have many EP and S Pass holders even with higher minimum qualifying salaries kicking in. 

Thus expect the housing leasing market to take in its stride the hiking of salary thresholds for new EP and S Pass applicants as well as renewals.

Crucially, over the long term, an AI-powered transformation of Singapore’s economy could provide a strong boost to the private housing market.