Housing prices unlikely to sustain momentum of past three years: Desmond Lee
Geopolitical uncertainties continue to haunt the worldwide economic climate, and Singapore will certainly not be unsusceptible to these results, advises Lee.
Property rates have actually additionally moderated, Lee observes. Based upon the 4Q2023 flash assessments, the nonpublic household consumer price index raised at a slower speed of 6.7% in 2023, contrasted to 8.6% in 2022.
The government ramped up the building and construction of brand-new Build-To-Order (BTO) and nonpublic real estate units to stabilize interest and supply. Near 21,400 HDB flats and 21,300 private housing units were finalized in 2023, amounting to 43,000. Lee notes that it is the greatest number of residences completed throughout both the HDB and exclusive markets in a certain year – as 2018.
The constraint in transaction quantity and rate development is expected to continue in 2024, affecting existing and prospective homebuyers, claims Lee. “As PM Lee accentuate in his New Year’s message, we need to be readied for our exterior atmosphere to become much less beneficial in the upcoming years.”
Likewise, HDB resale rates increased by 4.8%, less than half the 10.4% grow in 2022. The percentage of resale flat buyers that paid cash-over-valuation (COV) also reduced considerably in 2023, halving to 15% in 4Q2023 from practically 30% in 4Q2022. Thus, most HDB resale customers did not need to pay COV.
Domestic home loan prices are currently in between 3.7% and 4.4% and are expected to remain high for a prolonged time frame. Lee adds that it will certainly affect existing homeowners, prospective property buyers, 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, says that unmatched disturbances caused by the pandemic within the previous 4 years have caused a limited housing supply amid strong demand for real estate.
After a high of 43,000 new residences finished in 2023, one more 28,000 are arranged for finish this year, and an additional 24,000 in 2025. The complete range of public and private homes performed from 2023 to 2025 is only under 100,000 units.
Lee, therefore, concludes that housing prices are not likely to sustain the momentum they have actually seen in the last three years. “So, I encourage buyers to be prudent in their acquisitions to prevent overextending themselves,” he cautions.
The BTO application rate among first-timer whole families for all flat types in 2023 was 1.9, beneath the pre-pandemic level of 3.7 in 2019.
He adds in that interest for private and public household markets has shown signs of moderating, and transaction volumes have actually reduced. The complete number of private real estate and HDB resell transactions have already dropped by about 13% and 4%, each, in 2023, contrasted to 2022.