Housing prices unlikely to sustain momentum of past three years: Desmond Lee
After a high of 43,000 new houses accomplished in 2023, another 28,000 are arranged for finish this year, and an extra 24,000 in 2025. The total number of public and personal homes finished from 2023 to 2025 is only under 100,000 units.
The state ramped up the building and construction of brand-new Build-To-Order (BTO) and private real estate units to balance requirement and supply. Near 21,400 HDB flats and 21,300 exclusive housing units were completed in 2023, yielding 43,000. Lee marks that it is the biggest range of homes completed across both the HDB and exclusive markets in a particular year – since 2018.
Similarly, HDB resale rates increased by 4.8%, less than half the 10.4% raise in 2022. The percentage of resale flat buyers who bought cash-over-valuation (COV) even reduced substantially in 2023, cutting in half to 15% in 4Q2023 from just about 30% in 4Q2022. Therefore, most HDB resale purchasers did not need to pay for COV.
Property costs have likewise moderated, Lee spots. Based on the 4Q2023 flash estimates, the exclusive household consumer price index increased at a slower pace of 6.7% in 2023, contrasted to 8.6% in 2022.
The BTO application price among first-timer households for all flat varieties in 2023 was 1.9, less than the pre-pandemic rate of 3.7 in 2019.
Geopolitical uncertainties continue to weigh on the global economic climate, and Singapore will not be immune to these effects, warns 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, mentions that unprecedented interruptions brought on by the pandemic within the previous 4 years have resulted in a tight real estate supply amid solid need for housing.
The balance in deal amount and price development is anticipated to continue in 2024, impacting occurring and prospective homebuyers, claims Lee. “As PM Lee highlighted in his New Year’s message, we need to be prepared for our external atmosphere to become much less favourable in the upcoming years.”
Lee, consequently, closes out that housing rates are not likely to sustain the force they have seen in the last 3 years. “So, I urge buyers to be sensible in their purchases to avoid exhausting themselves,” he warns.
Domestic home mortgage rates are at the moment between 3.7% and 4.4% and are expected to remain strong for an extensive time frame. Lee adds that it will certainly impact existing property owners, possible homebuyers, and overleveraged and debt-laden companies.
He adds that interest for private and public residential markets has revealed signs of regulating, and deal volumes have actually decreased. The total variety of nonpublic real estate and HDB resale deals have already dropped by around 13% and 4%, each, in 2023, contrasted to 2022.