Housing prices unlikely to sustain momentum of past three years: Desmond Lee
In his opening address at the Building & Construction Authority-Real Estate Developers’ Association of Singapore’s Built Environment and Property Prospects Seminar on Jan 15, Desmond Lee, Minister for National Development and Minister-in-Charge of Social Services Integration, says that unmatched disruptions brought on by the pandemic within the past 4 years have indeed caused a strict housing supply amidst solid demand for real estate.
The state increase the building of new Build-To-Order (BTO) and private housing units to adjust requirement and supply. Around 21,400 HDB flats and 21,300 private real estate units were completed in 2023, yielding 43,000. Lee notes that it is the largest amount of homes finished across both the HDB and nonpublic markets in a particular year – ever since 2018.
Property rates have likewise moderated, Lee notices. Based on the 4Q2023 flash assessments, the private residential consumer price index boosted at a slower pace of 6.7% in 2023, matched up to 8.6% in 2022.
After a high of 43,000 new houses accomplished in 2023, another 28,000 are set up for completion this year, and an added 24,000 in 2025. The total number of public and exclusive homes performed from 2023 to 2025 is only under 100,000 units.
The BTO application rate among first-timer families for all flat kinds in 2023 was 1.9, lower than the pre-pandemic level of 3.7 in 2019.
Geopolitical worries continue to weigh on the global economic climate, and Singapore will certainly not be unsusceptible to these results, tells Lee.
He includes that interest for nonpublic and public household markets has actually shown indications of moderating, and purchase quantities have reduced. The complete number of private housing and HDB resale sales have slipped by around 13% and 4%, each, in 2023, contrasted to 2022.
Similarly, HDB resale costs boosted by 4.8%, less than half the 10.4% grow in 2022. The percentage of resale flat customers who paid cash-over-valuation (COV) also reduced significantly in 2023, cutting in half to 15% in 4Q2023 from practically 30% in 4Q2022. Hence, most HDB resale buyers did not have to pay COV.
Residential home mortgage prices are currently between 3.7% and 4.4% and are anticipated to continue to be high for a prolonged duration. Lee adds that it will certainly impact existing home owners, prospective buyers, and overleveraged and debt-laden companies.
The balance in transaction amount and rate growth is expected to proceed in 2024, affecting existing and prospective homebuyers, claims Lee. “As PM Lee highlighted in his New Year’s message, we must be prepared for our outside environment for being much less favourable in the upcoming years.”
Lee, for that reason, closes out that housing rates are unlikely to sustain the momentum they have actually seen in the former 3 years. “So, I encourage buyers to be smart in their investments to refrain from exhausting themselves,” he warns.
