Housing prices not expected to rise for now
High mortgage rates to have an impact on buyers
SINGAPORE: Housing prices in Singapore are not expected to rise indefinitely as signs of moderation are being observed in the public and private housing markets, says National Development Minister Desmond Lee.
Mortgage rates are expected to remain high, which will have an impact on buyers and homeowners, Lee added in an interview with The Straits Times and Chinese daily Lianhe Zaobao.
“We expect (interest rates) to remain high for longer, and the rates we see are between 3.7% and 4.4%, so that will have an impact,” he said.
Amid muted prospects for Singapore’s economy in 2024, many Singaporeans have been exercising “a lot of prudence and care in this uncertain environment”, Lee said.
He noted that major economies are expected to see slower growth in the midst of geopolitical tensions arising from the conflicts in the Middle East and Europe, for example.
Housing demand shot up during the Covid-19 pandemic, with the number of first-time Housing Board build-to-order (BTO) flat applicants rising by 80% from 2020 to 2022, compared with 2017 to 2019.
The pandemic’s impact on construction, materials and labour led to longer waits for BTO flats, which drove some home seekers to the resale market, causing prices to rise, Lee said.
The delays and uncertainties that came with BTO flats also led to some applying for a flat earlier than intended, while the demographic shift towards smaller households propped up demand.
The government has been working to address this supply-demand imbalance, including in the private housing market, over the last few years, Lee said.
The authorities had pledged to launch 100,000 BTO flats from 2021 to 2025. About 63,000 flats had been rolled out by 2023 and 19,600 are in the 2024 pipeline.
Application rates have stabilised, with 1.9 first-time applicants for each flat in 2023, down from 3.7 in 2019, said Lee.
The land supply for private housing was also ramped up in 2023, with 9,250 units released as part of 15 confirmed sites under the Government Land Sales programme. This is the highest in a decade, Lee noted.
Another 5,450 units across 10 sites are set to be released in the first half of 2024. It will be the seventh straight half-yearly increase in supply since the first half of 2021.
The rental market, which recorded strong pandemic demand as people rented while waiting for their delayed homes, has also started to show signs of easing.
This, Lee said, can be attributed to the return to post-pandemic normalcy as well as the number of completed units.
In 2023, nearly 42,000 public and private homes were completed, comprising about 21,400 Housing and Development Board (HDB) flats and 20,400 private units. This was the biggest annual supply of completed homes in both markets since 2017, he added.
Although property prices continued climbing, signs of moderation were seen in both markets. HDB resale prices rose 4.8% in 2023, slower than the 10.4% increase in 2022, while private home prices grew 6.7% in 2023, compared with 8.6% in 2022, according to government flash estimates.
Lee was asked if the authorities would increase subsidies for prime location flats if resale prices continued to rise. Flats under the prime location public housing (PLH) model have extra subsidies on top of existing BTO subsidies.
In the BTO launch in December 2023, the extra subsidies for two PLH projects were raised in response to rising prices in the resale market.