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 remarkable interruptions caused by the pandemic within the past 4 years have actually led to a limited real estate supply in the middle of strong need for housing.
He adds in that interest for private and public residential markets has shown indications of regulating, and purchase quantities have lowered. The overall variety of nonpublic housing and HDB resale sales have slipped by about 13% and 4%, respectively, in 2023, contrasted to 2022.
The moderation in transaction amount and rate growth is expected to continue in 2024, impacting existing and prospective property buyers, says Lee. “As PM Lee highlighted in his New Year’s message, we must be readied for our outside environment for being much less favourable in the upcoming years.”
Residential home mortgage rates are at the moment in between 3.7% and 4.4% and are anticipated to continue to be strong for a prolonged duration. Lee adds that it will certainly affect existing property owners, prospective homebuyers, and overleveraged and debt-laden business.
The authorities ramped up the building and construction of new Build-To-Order (BTO) and private housing units to balance demand and supply. Around 21,400 HDB flats and 21,300 private real estate units were finalized in 2023, amounting to 43,000. Lee notes that it is the greatest amount of houses finished across both the HDB and exclusive industry in a given year – since 2018.
Lee, consequently, closes out that housing costs are not likely to sustain the momentum they have actually seen in the former 3 years. “So, I urge purchasers to be prudent in their purchases to refrain from exhausting themselves,” he warns.
The BTO application price amongst first-timer households for all flat varieties in 2023 was 1.9, beneath the pre-pandemic rate of 3.7 in 2019.
In a similar way, HDB resale prices increased by 4.8%, less than half the 10.4% increase in 2022. The proportion of resale flat purchasers that bought cash-over-valuation (COV) even reduced dramatically in 2023, cutting in half to 15% in 4Q2023 from nearly 30% in 4Q2022. For this reason, most HDB resale buyers did not have to pay for COV.
After a high of 43,000 new houses finished in 2023, one more 28,000 are set up for finish this year, and an extra 24,000 in 2025. The total range of public and exclusive homes finished from 2023 to 2025 is only under 100,000 units.
Geopolitical worries continue to weigh on the worldwide economic climate, and Singapore will not be immune to these effects, advises Lee.
Property prices have actually likewise moderated, Lee observes. Based on the 4Q2023 flash quotes, the exclusive household consumer price index raised at a slower speed of 6.7% in 2023, contrasted to 8.6% in 2022.