Housing prices unlikely to sustain momentum of past three years: Desmond Lee

After a high of 43,000 brand-new homes accomplished in 2023, one more 28,000 are scheduled for finish this year, and an additional 24,000 in 2025. The overall amount of public and personal homes completed from 2023 to 2025 is only under 100,000 units.

Domestic home mortgage rates are currently in between 3.7% and 4.4% and are anticipated to stay high for an extensive time frame. Lee adds that it will impact existing house owners, prospective buyers, and overleveraged and debt-laden firms.

Similarly, HDB resale prices raised by 4.8%, less than half the 10.4% increase in 2022. The percentage of resale flat customers who bought cash-over-valuation (COV) also decreased substantially in 2023, halving to 15% in 4Q2023 from almost 30% in 4Q2022. Thus, most HDB resale customers did not have to pay COV.

The balance in transaction volume and rate development is expected to continue in 2024, impacting existing and prospective buyers, claims Lee. “As PM Lee emphasize in his New Year’s message, we should be readied for our exterior setting to be much less beneficial in the upcoming years.”

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 unmatched interruptions brought on by the pandemic over the previous 4 years have actually led to a limited housing supply amidst solid need for real estate.

Property prices have also regulated, Lee spots. Based on the 4Q2023 flash quotes, the nonpublic residential price index boosted at a reduced rate of 6.7% in 2023, matched up to 8.6% in 2022.

The BTO application rate among first-timer families for all flat varieties in 2023 was 1.9, less than the pre-pandemic level of 3.7 in 2019.

Lee, therefore, concludes that housing prices are less likely to sustain the force they have observed in the last three years. “So, I motivate customers to be sensible in their acquisitions to avoid exhausting themselves,” he cautions.

Sky Eden Bedok, Bedok Central

The authorities ramped up the construction of brand-new Build-To-Order (BTO) and private housing units to balance demand and supply. Approximately 21,400 HDB flats and 21,300 exclusive real estate units were completed in 2023, amounting to 43,000. Lee notes that it is the largest range of residences finished across both the HDB and private markets in a certain year – since 2018.

Geopolitical unpredictabilities continue to weigh on the worldwide economic climate, and Singapore will not be immune to these impacts, advises Lee.

He includes that need for exclusive and public household markets has shown signs of moderating, and deal volumes have actually decreased. The complete number of private housing and HDB resell transactions have already fallen by about 13% and 4%, each, in 2023, compared to 2022.

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