Housing prices unlikely to sustain momentum of past three years: Desmond Lee
The BTO application rate among first-timer families for all flat varieties in 2023 was 1.9, less than the pre-pandemic rate of 3.7 in 2019.
He adds that demand for exclusive and public household markets has actually shown indicators of regulating, and deal quantities have reduced. The total number of nonpublic real estate and HDB resell transactions have fallen by around 13% and 4%, respectively, in 2023, compared to 2022.
Geopolitical worries continue to weigh on the worldwide economic climate, and Singapore will not be immune to these impacts, tells Lee.
Domestic home mortgage rates are currently between 3.7% and 4.4% and are expected to remain elevated for an extensive duration. Lee adds that it will certainly affect existing house owners, potential homebuyers, and overleveraged and debt-laden companies.
Property prices have also moderated, Lee notices. Based upon the 4Q2023 flash estimates, the private household price index boosted at a slower pace of 6.7% in 2023, contrasted to 8.6% in 2022.
The balance in transaction volume and cost development is anticipated to proceed in 2024, affecting occurring and prospective homebuyers, says Lee. “As PM Lee highlighted in his New Year’s message, we must be readied for our external atmosphere for being less good in the upcoming years.”
Similarly, HDB resale prices boosted by 4.8%, less than half the 10.4% grow in 2022. The proportion of resale flat purchasers that paid cash-over-valuation (COV) also decreased significantly in 2023, cutting in half to 15% in 4Q2023 from almost 30% in 4Q2022. Thus, most HDB resale purchasers did not have to pay for COV.
The state increase the building of new Build-To-Order (BTO) and nonpublic real estate units to balance interest and supply. Around 21,400 HDB flats and 21,300 private real estate units were completed in 2023, totalling 43,000. Lee notes that it is the largest range of houses finished throughout both the HDB and exclusive industry in a particular year – since 2018.
After a high of 43,000 new houses accomplished in 2023, an additional 28,000 are set up for completion this year, and an extra 24,000 in 2025. The complete range of public and personal homes completed from 2023 to 2025 is merely under 100,000 units.
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 remarkable interruptions brought on by the pandemic over the past 4 years have caused a strict housing supply amidst strong demand for mortgage.
Lee, therefore, concludes that real estate costs are not likely to sustain the force they have actually observed in the past 3 years. “So, I motivate buyers to be prudent in their investments to refrain from stressing themselves,” he cautions.
