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

Property costs have actually likewise regulated, Lee spots. Based on the 4Q2023 flash quotes, the private household price index improved at a slower rate of 6.7% in 2023, compared to 8.6% in 2022.

After a high of 43,000 brand-new houses completed in 2023, one more 28,000 are scheduled for finish this year, and an extra 24,000 in 2025. The total range of public and personal homes finished from 2023 to 2025 is merely under 100,000 units.

Lee, therefore, concludes that housing costs are unlikely to sustain the momentum they have actually observed in the former 3 years. “So, I encourage customers to be smart in their investments to prevent overextending themselves,” he warns.

Similarly, HDB resale rates raised by 4.8%, less than half the 10.4% grow in 2022. The proportion of resale flat buyers that paid cash-over-valuation (COV) also reduced significantly in 2023, halving to 15% in 4Q2023 from nearly 30% in 4Q2022. Hence, most HDB resale buyers did not need to pay COV.

Residential home loan prices are at the moment in between 3.7% and 4.4% and are anticipated to stay elevated for an extensive duration. Lee includes that it will influence existing house owners, possible property buyers, and overleveraged and debt-laden business.

The government ramped up the building and construction of new Build-To-Order (BTO) and private housing units to stabilize demand and supply. Around 21,400 HDB apartments and 21,300 private housing units were finished in 2023, amounting to 43,000. Lee marks that it is the largest range of homes completed throughout both the HDB and private markets in a specific year – since 2018.

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 remarkable disruptions brought on by the pandemic within the previous four years have actually caused a strict real estate supply amidst strong demand for real estate.

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

The constraint in deal quantity and cost development is anticipated to proceed in 2024, influencing occurring and prospective property buyers, states Lee. “As PM Lee emphasize in his New Year’s message, we need to be planned for our exterior environment to become less favourable in the upcoming years.”

Geopolitical unpredictabilities remain to weigh on the international economy, and Singapore will not be unsusceptible to these impacts, tells Lee.

He adds in that demand for private and public non commercial markets has presented signs of regulating, and transaction quantities have lowered. The total number of private housing and HDB resell sales have already slipped by about 13% and 4%, respectively, in 2023, contrasted to 2022.

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