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

Geopolitical unpredictabilities remain to weigh on the international economic climate, and Singapore will certainly not be immune to these effects, tells Lee.

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 unprecedented disturbances caused by the pandemic over the past 4 years have indeed led to a tight real estate supply amidst strong demand for real estate.

Similarly, HDB resale rates raised by 4.8%, less than half the 10.4% raise in 2022. The proportion of resale flat buyers who paid cash-over-valuation (COV) also decreased significantly in 2023, halving to 15% in 4Q2023 from practically 30% in 4Q2022. Therefore, most HDB resale purchasers did not need to pay for COV.

Residential home loan rates are currently between 3.7% and 4.4% and are expected to stay elevated for a prolonged period. Lee adds that it will affect existing home owners, prospective homebuyers, and overleveraged and debt-laden companies.

Lee, for that reason, concludes that real estate costs are unlikely to sustain the momentum they have seen in the former 3 years. “So, I motivate purchasers to be smart in their acquisitions to refrain from stressing themselves,” he warns.

Property rates have also regulated, Lee spots. Based upon the 4Q2023 flash estimates, the nonpublic residential price index increased at a reduced speed of 6.7% in 2023, contrasted to 8.6% in 2022.

The moderation in transaction quantity and cost development is expected to proceed in 2024, influencing existing and prospective homebuyers, claims Lee. “As PM Lee accentuate in his New Year’s message, we ought to be readied for our outside setting to become much less beneficial in the upcoming years.”

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

Watten House Shelford Road

He includes that need for private and public residential markets has actually presented indicators of regulating, and transaction volumes have actually lowered. The total number of private housing and HDB resell transactions have already dropped by around 13% and 4%, respectively, in 2023, compared to 2022.

After a high of 43,000 brand-new homes accomplished in 2023, another 28,000 are arranged for completion this year, and an added 24,000 in 2025. The complete amount of public and private homes performed from 2023 to 2025 is only under 100,000 units.

The state increase the building of new Build-To-Order (BTO) and exclusive housing units to balance demand and supply. Near 21,400 HDB flats and 21,300 private housing units were finalized in 2023, amounting to 43,000. Lee indicates that it is the greatest number of houses finished across both the HDB and nonpublic industry in a certain year – as 2018.

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