Housing prices unlikely to sustain momentum of past three years: Desmond Lee
Residential home loan prices are at the moment in between 3.7% and 4.4% and are anticipated to continue to be strong for a prolonged period. Lee adds that it will certainly impact existing home owners, prospective property buyers, and overleveraged and debt-laden firms.
The BTO application price amongst first-timer whole families for all flat kinds in 2023 was 1.9, beneath the pre-pandemic rate 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, states that remarkable interruptions brought on by the pandemic within the last four years have actually led to a tight real estate supply in the middle of solid need for mortgage.
Lee, therefore, concludes that real estate prices are not likely to sustain the momentum they have seen in the past three years. “So, I motivate purchasers to be sensible in their purchases to avoid stressing themselves,” he cautions.
The state ramped up the building and construction of new Build-To-Order (BTO) and private real estate units to balance need and supply. Around 21,400 HDB flats and 21,300 exclusive housing units were finalized in 2023, amounting to 43,000. Lee notes that it is the biggest number of houses finished across both the HDB and private industry in a given year – as 2018.
In a similar way, HDB resale rates raised by 4.8%, less than half the 10.4% raise in 2022. The proportion of resale flat customers that bought cash-over-valuation (COV) also decreased substantially in 2023, cutting in half to 15% in 4Q2023 from almost 30% in 4Q2022. Hence, most HDB resale purchasers did not need to pay for COV.
Property rates have additionally regulated, Lee observes. Based on the 4Q2023 flash assessments, the nonpublic residential consumer price index increased at a reduced speed of 6.7% in 2023, matched up to 8.6% in 2022.
He adds that interest for exclusive and public non commercial markets has revealed signs of regulating, and purchase volumes have decreased. The overall number of nonpublic real estate and HDB resale deals have dropped by about 13% and 4%, each, in 2023, compared to 2022.
Geopolitical uncertainties continue to haunt the worldwide economic climate, and Singapore will certainly not be unsusceptible to these impacts, advises Lee.
The balance in deal amount and cost development is expected to continue in 2024, impacting occurring and prospective property buyers, states Lee. “As PM Lee highlighted in his New Year’s message, we need to be planned for our external atmosphere to be much less favourable in the upcoming years.”
After a high of 43,000 new residences accomplished in 2023, one more 28,000 are scheduled for finish this year, and an additional 24,000 in 2025. The complete number of public and private homes completed from 2023 to 2025 is only under 100,000 units.