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 unmatched disturbances caused by the pandemic within the past four years have indeed caused a tight real estate supply amid solid demand for mortgage.
The BTO application price amongst first-timer households for all flat kinds in 2023 was 1.9, lower than the pre-pandemic level of 3.7 in 2019.
Similarly, HDB resale prices raised by 4.8%, less than half the 10.4% grow in 2022. The proportion of resale flat purchasers that paid cash-over-valuation (COV) even decreased substantially in 2023, halving to 15% in 4Q2023 from nearly 30% in 4Q2022. For this reason, most HDB resale purchasers did not have to pay COV.
He includes that demand for private and public household markets has actually revealed signs of regulating, and purchase quantities have reduced. The total variety of private housing and HDB resale deals have already fallen by around 13% and 4%, each, in 2023, contrasted to 2022.
Property costs have actually likewise regulated, Lee notices. Based upon the 4Q2023 flash estimates, the nonpublic household consumer price index boosted at a reduced pace of 6.7% in 2023, contrasted to 8.6% in 2022.
Geopolitical unpredictabilities remain to weigh on the global economic climate, and Singapore will certainly not be immune to these effects, advises Lee.
Residential home loan rates are at the moment in between 3.7% and 4.4% and are expected to stay high for an extended period. Lee adds that it will impact existing house owners, potential property buyers, and overleveraged and debt-laden companies.
The moderation in transaction amount and cost growth is expected to proceed in 2024, influencing occurring and prospective buyers, states Lee. “As PM Lee highlighted in his New Year’s message, we ought to be planned for our external environment to be much less favourable in the upcoming years.”
The state increase the building and construction of brand-new Build-To-Order (BTO) and private housing units to adjust interest and supply. Around 21,400 HDB apartments and 21,300 exclusive real estate units were completed in 2023, amounting to 43,000. Lee marks that it is the largest amount of residences finished throughout both the HDB and nonpublic markets in a certain year – since 2018.
After a high of 43,000 new houses completed in 2023, an additional 28,000 are set up for completion this year, and an extra 24,000 in 2025. The complete amount of public and personal homes completed from 2023 to 2025 is merely under 100,000 units.
Lee, as a result, concludes that real estate costs are not likely to sustain the force they have observed in the past three years. “So, I encourage purchasers to be sensible in their purchases to prevent overextending themselves,” he warns.