Housing prices unlikely to sustain momentum of past three years: Desmond Lee
The authorities ramped up the building and construction of brand-new Build-To-Order (BTO) and private real estate units to stabilize demand and supply. Approximately 21,400 HDB apartments and 21,300 private real estate units were completed in 2023, yielding 43,000. Lee notes that it is the largest range of residences completed throughout both the HDB and private markets in a certain year – ever since 2018.
Lee, consequently, concludes that housing costs are not likely to sustain the momentum they have actually observed in the past three years. “So, I urge purchasers to be smart in their purchases to refrain from overextending themselves,” he warns.
Domestic mortgage rates are currently in between 3.7% and 4.4% and are anticipated to stay strong for an extensive time frame. Lee adds that it will impact existing home owners, prospective homebuyers, and overleveraged and debt-laden firms.
Geopolitical uncertainties continue to weigh on the worldwide economic climate, and Singapore will not be unsusceptible to these effects, advises Lee.
After a high of 43,000 new houses finished in 2023, an additional 28,000 are set up for completion this year, and an extra 24,000 in 2025. The total amount of public and private homes finished from 2023 to 2025 is only under 100,000 units.
He adds in that need for nonpublic and public residential markets has shown signs of moderating, and deal quantities have lowered. The overall variety of private housing and HDB resale transactions have already slipped by about 13% and 4%, respectively, in 2023, compared to 2022.
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 brought on by the pandemic within the last 4 years have indeed caused a tight housing supply amidst strong need for real estate.
Similarly, HDB resale prices increased by 4.8%, less than half the 10.4% increase in 2022. The percentage of resale flat customers who paid for cash-over-valuation (COV) even decreased considerably in 2023, cutting in half to 15% in 4Q2023 from almost 30% in 4Q2022. Therefore, most HDB resale buyers did not have to pay for COV.
The moderation in purchase quantity and cost development is expected to continue in 2024, affecting existing and prospective property buyers, says Lee. “As PM Lee accentuate in his New Year’s message, we must be prepared for our external atmosphere to be less good in the upcoming years.”
Property rates have actually also moderated, Lee notices. Based upon the 4Q2023 flash assessments, the exclusive residential price index improved at a weaker rate of 6.7% in 2023, contrasted to 8.6% in 2022.
The BTO application rate amongst first-timer whole families for all flat varieties in 2023 was 1.9, beneath the pre-pandemic level of 3.7 in 2019.