Housing prices unlikely to sustain momentum of past three years: Desmond Lee
Geopolitical unpredictabilities continue to weigh on the international economic situation, and Singapore will not be unsusceptible to these effects, tells Lee.
The constraint in deal volume and cost development is anticipated to continue in 2024, influencing existing and prospective property buyers, claims Lee. “As PM Lee accentuate in his New Year’s message, we should be readied for our external setting for being much less favourable in the upcoming years.”
Residential home loan prices are currently in between 3.7% and 4.4% and are expected to continue to be strong for an extended time frame. Lee adds that it will impact existing home owners, prospective property buyers, and overleveraged and debt-laden companies.
After a high of 43,000 brand-new homes accomplished in 2023, one more 28,000 are set up for completion this year, and an added 24,000 in 2025. The overall amount of public and personal homes completed from 2023 to 2025 is merely under 100,000 units.
Property prices have actually likewise regulated, Lee spots. Based on the 4Q2023 flash assessments, the nonpublic household consumer price index increased at a slower speed of 6.7% in 2023, matched up to 8.6% in 2022.
Similarly, HDB resale rates raised by 4.8%, less than half the 10.4% increase in 2022. The proportion of resale flat customers that paid cash-over-valuation (COV) also reduced dramatically in 2023, halving to 15% in 4Q2023 from nearly 30% in 4Q2022. Therefore, most HDB resale buyers did not need to pay for COV.
He adds in that need for private and public residential markets has revealed signs of moderating, and purchase volumes have lowered. The complete number of nonpublic real estate and HDB resale transactions have already slipped by around 13% and 4%, respectively, in 2023, contrasted to 2022.
The BTO application rate amongst first-timer families for all flat kinds in 2023 was 1.9, beneath the pre-pandemic level of 3.7 in 2019.
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, mentions that remarkable interruptions caused by the pandemic within the past 4 years have caused a tight housing supply amid strong demand for mortgage.
The state ramped up the building of brand-new Build-To-Order (BTO) and private real estate units to balance demand and supply. Near 21,400 HDB flats and 21,300 private housing units were completed in 2023, yielding 43,000. Lee notes that it is the greatest number of homes finished across both the HDB and exclusive markets in a certain year – as 2018.
Lee, consequently, concludes that real estate prices are not likely to sustain the momentum they have seen in the last three years. “So, I encourage purchasers to be prudent in their investments to prevent exhausting themselves,” he warns.