Housing prices unlikely to sustain momentum of past three years: Desmond Lee
Geopolitical worries remain to weigh on the international economic situation, and Singapore will certainly not be unsusceptible to these effects, warns Lee.
The moderation in purchase amount and rate growth is expected to proceed in 2024, affecting existing and prospective homebuyers, says Lee. “As PM Lee emphasize in his New Year’s message, we must be prepared for our outside setting for being much less good in the upcoming years.”
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 remarkable interruptions caused by the pandemic within the last 4 years have resulted in a tight housing supply amidst strong need for housing.
Similarly, HDB resale prices increased by 4.8%, less than half the 10.4% increase in 2022. The proportion of resale flat purchasers that paid for cash-over-valuation (COV) also decreased substantially in 2023, halving to 15% in 4Q2023 from practically 30% in 4Q2022. Therefore, most HDB resale buyers did not have to pay COV.
The BTO application rate among first-timer whole families for all flat varieties in 2023 was 1.9, beneath the pre-pandemic rate of 3.7 in 2019.
Residential home mortgage rates are currently between 3.7% and 4.4% and are anticipated to continue to be elevated for an extended period. Lee adds that it will impact existing home owners, prospective buyers, and overleveraged and debt-laden business.
The authorities ramped up the building and construction of brand-new Build-To-Order (BTO) and nonpublic housing units to balance need and supply. Around 21,400 HDB apartments and 21,300 exclusive housing units were completed in 2023, totalling 43,000. Lee notes that it is the largest amount of homes finished across both the HDB and exclusive industry in a given year – as 2018.
Lee, for that reason, closes out that real estate costs are unlikely to sustain the momentum they have observed in the former 3 years. “So, I urge purchasers to be sensible in their investments to refrain from stressing themselves,” he cautions.
After a high of 43,000 brand-new homes completed in 2023, one more 28,000 are set up for finish this year, and an added 24,000 in 2025. The complete number of public and private homes finished from 2023 to 2025 is merely under 100,000 units.
Property rates have additionally moderated, Lee spots. Based upon the 4Q2023 flash quotes, the exclusive household consumer price index improved at a slower rate of 6.7% in 2023, contrasted to 8.6% in 2022.
He adds that need for nonpublic and public non commercial markets has revealed signs of moderating, and purchase quantities have actually reduced. The total number of private housing and HDB resale transactions have dropped by about 13% and 4%, respectively, in 2023, contrasted to 2022.