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, states that unprecedented disturbances brought on by the pandemic within the past four years have actually resulted in a limited housing supply amidst solid need for housing.
He adds that demand for private and public residential markets has actually presented indicators of moderating, and purchase quantities have lowered. The complete number of exclusive housing and HDB resell transactions have slipped by around 13% and 4%, each, in 2023, contrasted to 2022.
Domestic home mortgage rates are currently in between 3.7% and 4.4% and are anticipated to stay strong for a prolonged duration. Lee adds that it will influence existing home owners, possible property buyers, and overleveraged and debt-laden business.
Property prices have also regulated, Lee notices. Based upon the 4Q2023 flash assessments, the nonpublic residential consumer price index improved at a slower rate of 6.7% in 2023, contrasted to 8.6% in 2022.
The moderation in deal amount and price development is expected to proceed in 2024, affecting existing and prospective homebuyers, says Lee. “As PM Lee highlighted in his New Year’s message, we should be planned for our external setting for being less good in the upcoming years.”
The BTO application price among first-timer families for all flat kinds in 2023 was 1.9, lower than the pre-pandemic level of 3.7 in 2019.
Lee, for that reason, closes out that real estate costs are not likely to sustain the force they have actually observed in the past three years. “So, I encourage purchasers to be sensible in their acquisitions to refrain from overextending themselves,” he cautions.
After a high of 43,000 new residences accomplished in 2023, another 28,000 are arranged for completion this year, and an additional 24,000 in 2025. The total range of public and exclusive homes finished from 2023 to 2025 is merely under 100,000 units.
In a similar way, HDB resale prices boosted by 4.8%, less than half the 10.4% raise in 2022. The proportion of resale flat customers who bought cash-over-valuation (COV) also decreased dramatically in 2023, halving to 15% in 4Q2023 from practically 30% in 4Q2022. Therefore, most HDB resale buyers did not need to pay for COV.
The government increase the building and construction of brand-new Build-To-Order (BTO) and private housing units to balance requirement and supply. Approximately 21,400 HDB apartments and 21,300 exclusive housing units were completed in 2023, yielding 43,000. Lee notes that it is the biggest amount of homes finished throughout both the HDB and private markets in a particular year – since 2018.
Geopolitical worries continue to haunt the worldwide economic climate, and Singapore will certainly not be immune to these results, advises Lee.