Housing prices unlikely to sustain momentum of past three years: Desmond Lee
After a high of 43,000 new houses accomplished in 2023, an additional 28,000 are set up for completion this year, and an extra 24,000 in 2025. The total number of public and personal homes finished from 2023 to 2025 is just under 100,000 units.
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, states that unmatched disturbances brought on by the pandemic within the past four years have actually resulted in a tight real estate supply in the middle of solid need for housing.
Residential home mortgage rates are currently in between 3.7% and 4.4% and are expected to stay elevated for a prolonged duration. Lee includes that it will certainly affect existing homeowners, possible buyers, and overleveraged and debt-laden business.
Likewise, HDB resale rates boosted by 4.8%, less than half the 10.4% grow in 2022. The percentage of resale flat buyers who paid for cash-over-valuation (COV) even decreased significantly in 2023, cutting in half to 15% in 4Q2023 from practically 30% in 4Q2022. For this reason, most HDB resale purchasers did not need to pay COV.
Property rates have actually also regulated, Lee notices. Based on the 4Q2023 flash estimates, the private residential consumer price index increased at a slower speed of 6.7% in 2023, contrasted to 8.6% in 2022.
Geopolitical uncertainties continue to haunt the international economic climate, and Singapore will not be immune to these effects, tells Lee.
The BTO application rate among first-timer families for all flat varieties in 2023 was 1.9, lower than the pre-pandemic level of 3.7 in 2019.
He adds that need for nonpublic and public residential markets has actually shown signs of regulating, and transaction quantities have actually decreased. The total number of exclusive housing and HDB resell deals have fallen by around 13% and 4%, respectively, in 2023, compared to 2022.
Lee, as a result, closes out that housing prices are less likely to sustain the force they have actually seen in the past three years. “So, I motivate purchasers to be sensible in their purchases to prevent exhausting themselves,” he cautions.
The authorities increase the building and construction of brand-new Build-To-Order (BTO) and exclusive real estate units to adjust requirement and supply. Near 21,400 HDB flats and 21,300 private real estate units were completed in 2023, totalling 43,000. Lee indicates that it is the biggest amount of residences completed throughout both the HDB and exclusive markets in a certain year – as 2018.
The balance in deal quantity and cost development is expected to continue in 2024, influencing existing and prospective property buyers, claims Lee. “As PM Lee emphasize in his New Year’s message, we need to be planned for our outside atmosphere for being much less good in the upcoming years.”