Housing prices unlikely to sustain momentum of past three years: Desmond Lee
The government increase the construction of new Build-To-Order (BTO) and private housing units to stabilize need and supply. Near 21,400 HDB flats and 21,300 private real estate units were finalized in 2023, totalling 43,000. Lee marks that it is the biggest number of houses finished throughout both the HDB and exclusive industry in a particular year – ever since 2018.
The balance in deal quantity and rate growth is expected to proceed in 2024, influencing existing and prospective property buyers, states Lee. “As PM Lee highlighted in his New Year’s message, we must be planned for our outside environment for being less favourable in the upcoming years.”
After a high of 43,000 brand-new residences finished in 2023, one more 28,000 are arranged for completion this year, and an extra 24,000 in 2025. The overall amount of public and exclusive homes finished from 2023 to 2025 is merely under 100,000 units.
In a similar way, HDB resale rates increased by 4.8%, less than half the 10.4% increase in 2022. The percentage of resale flat customers that paid for cash-over-valuation (COV) also decreased substantially in 2023, halving to 15% in 4Q2023 from nearly 30% in 4Q2022. Hence, most HDB resale buyers did not need to pay COV.
Geopolitical unpredictabilities remain to weigh on the international economic climate, and Singapore will certainly not be unsusceptible to these results, advises Lee.
Residential home mortgage prices are right now in between 3.7% and 4.4% and are anticipated to continue to be strong for an extensive time frame. Lee adds that it will certainly affect existing property owners, prospective homebuyers, and overleveraged and debt-laden firms.
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 past four years have actually caused a limited housing supply amid strong need for mortgage.
Property prices have actually additionally moderated, Lee notices. Based upon the 4Q2023 flash assessments, the private household consumer price index improved at a reduced pace of 6.7% in 2023, matched up to 8.6% in 2022.
The BTO application price among first-timer households for all flat kinds in 2023 was 1.9, beneath the pre-pandemic level of 3.7 in 2019.
Lee, therefore, closes out that housing prices are unlikely to sustain the momentum they have actually seen in the past three years. “So, I encourage buyers to be sensible in their acquisitions to refrain from overextending themselves,” he warns.
He adds that interest for nonpublic and public residential markets has presented indications of moderating, and transaction volumes have reduced. The complete number of private housing and HDB resale transactions have slipped by about 13% and 4%, respectively, in 2023, compared to 2022.