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

The authorities ramped up the building and construction of brand-new Build-To-Order (BTO) and exclusive housing units to stabilize requirement and supply. Near 21,400 HDB flats and 21,300 private housing units were completed in 2023, amounting to 43,000. Lee indicates that it is the greatest amount of houses completed throughout both the HDB and nonpublic markets in a certain year – ever since 2018.

Geopolitical unpredictabilities remain to weigh on the worldwide economic situation, and Singapore will not be immune to these impacts, warns Lee.

Lee, for that reason, concludes that housing costs are unlikely to sustain the force they have observed in the former 3 years. “So, I urge buyers to be smart in their acquisitions to avoid exhausting themselves,” he warns.

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Similarly, HDB resale prices boosted by 4.8%, less than half the 10.4% raise in 2022. The percentage of resale flat purchasers who paid cash-over-valuation (COV) even decreased significantly in 2023, halving to 15% in 4Q2023 from just about 30% in 4Q2022. For this reason, most HDB resale customers did not need to pay COV.

He includes that demand for private and public household markets has actually shown indicators of regulating, and deal volumes have reduced. The complete variety of nonpublic real estate and HDB resell transactions have already dropped by around 13% and 4%, respectively, in 2023, compared to 2022.

The balance in deal quantity and price development is expected to proceed in 2024, influencing existing and prospective buyers, states Lee. “As PM Lee highlighted in his New Year’s message, we should be planned for our external atmosphere to become much less favourable 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, mentions that unprecedented interruptions caused by the pandemic over the previous 4 years have indeed led to a limited housing supply amid solid demand for real estate.

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

After a high of 43,000 brand-new homes completed in 2023, one more 28,000 are set up for finish this year, and an additional 24,000 in 2025. The total number of public and private homes completed from 2023 to 2025 is merely under 100,000 units.

Property prices have actually likewise moderated, Lee observes. Based on the 4Q2023 flash estimates, the private household price index improved at a slower speed of 6.7% in 2023, matched up to 8.6% in 2022.

Domestic mortgage rates are at the moment between 3.7% and 4.4% and are anticipated to stay high for an extended time frame. Lee adds that it will certainly impact existing property owners, potential property buyers, and overleveraged and debt-laden companies.

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