Housing prices unlikely to sustain momentum of past three years: Desmond Lee
Geopolitical uncertainties continue to weigh on the global economy, and Singapore will not be unsusceptible to these results, warns Lee.
The BTO application rate among first-timer families for all flat types in 2023 was 1.9, lower than the pre-pandemic level of 3.7 in 2019.
Property costs have actually likewise regulated, Lee spots. Based upon the 4Q2023 flash estimates, the exclusive residential price index improved at a weaker rate of 6.7% in 2023, contrasted to 8.6% in 2022.
The constraint in purchase volume and rate development is anticipated to continue in 2024, impacting occurring and prospective property buyers, states Lee. “As PM Lee accentuate in his New Year’s message, we need to be prepared for our external environment to be less favourable in the upcoming years.”
Likewise, HDB resale costs raised by 4.8%, less than half the 10.4% grow in 2022. The percentage of resale flat purchasers that bought cash-over-valuation (COV) even reduced dramatically in 2023, cutting in half to 15% in 4Q2023 from practically 30% in 4Q2022. For this reason, most HDB resale buyers did not need to pay for COV.
He adds that demand for nonpublic and public non commercial markets has actually revealed indicators of moderating, and transaction volumes have actually lowered. The overall number of nonpublic real estate and HDB resale transactions have already fallen by around 13% and 4%, each, in 2023, contrasted to 2022.
Domestic mortgage rates are right now in between 3.7% and 4.4% and are anticipated to remain strong for a prolonged time frame. Lee includes that it will affect existing home owners, potential homebuyers, and overleveraged and debt-laden business.
After a high of 43,000 brand-new houses completed in 2023, an additional 28,000 are scheduled for completion this year, and an extra 24,000 in 2025. The complete range of public and personal homes performed from 2023 to 2025 is just 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, mentions that unprecedented disruptions caused by the pandemic over the previous four years have actually caused a strict real estate supply amidst strong demand for real estate.
Lee, for that reason, concludes that housing rates are unlikely to sustain the momentum they have actually observed in the past three years. “So, I urge purchasers to be sensible in their acquisitions to refrain from exhausting themselves,” he cautions.
The government ramped up the building of new Build-To-Order (BTO) and exclusive housing units to stabilize need and supply. Around 21,400 HDB apartments and 21,300 private real estate units were finalized in 2023, amounting to 43,000. Lee indicates that it is the largest number of homes completed across both the HDB and nonpublic industry in a given year – ever since 2018.