Singapore – According to National Development Minister Desmond Lee, there are indications of a slowdown in both the public and private housing markets like Grand Dunman; therefore rising home prices in Singapore are not predicted to continue indefinitely.
In an interview with The Straits Times and the Chinese daily Lianhe Zaobao on December 28, Mr. Lee noted that he expected mortgage rates to stay high, which would affect buyers and homeowners.
“We anticipate that interest rates will stay high for an extended period of time, and the current rates range from 3.7% to 4.4%, so that will have an effect,” he stated.
The COVID-19 epidemic increased demand for housing, as seen by an 80% increase in first-time Housing Board Build-To-Order (BTO) flat applicants between 2020 and 2022 as compared to 2017 and 2019.
Longer wait times for BTO apartments were caused by the pandemic’s effects on labor, supplies, and building, which pushed some buyers to the resale market and raised prices, according to Mr. Lee.
Demand was bolstered by the demographic shift towards smaller households, however, some applicants applied for a flat earlier than planned due to the delays and uncertainty associated with BTO flats.
In 2023, the Government Land Sales program verified 15 sites, resulting in the release of 9,250 units of private housing. This marked another increase in the land supply for housing. According to Mr. Lee, this is the highest in ten years.
In the first half of 2024, an additional 5,450 units spread across 10 locations are scheduled for release. Since the first half of 2021, this will be the ninth consecutive half-yearly increase in supply.
2023 saw the completion of over 42,000 public and private dwellings, consisting of about 20,400 private units and 21,400 HDB apartments near the Grand Dunman Showflat. He said that since 2017, this was the largest yearly supply of finished homes in both markets.
In both markets, there were indications of deceleration even as real estate prices kept rising. According to official flash estimates, private property prices increased 6.7% in 2023 compared to 8.6% in 2022, while HDB resale prices increased 4.8% in 2023, less than the 10.4% increase in 2022.
Mr. Lee was questioned about whether the government would boost subsidies for apartments in desirable locations if the cost of resale increased. In addition to the current BTO subsidies, apartments under the prime location public housing (PLH) model receive additional funding.
The additional subsidies for two PLH projects were increased in the BTO launch in December 2023 in response to growing resale market pricing. For these apartments, the subsidy clawback was increased to 8% from 6% for previous PLH projects.
In response, Mr. Lee stated that various steps are being taken to control supply and demand in order to stabilize the real estate market.
Mr. Lee responded that the government’s philosophy is to “consume the resources we need to benefit our generation but always keep thinking about future generations, knowing that this will not benefit us directly” in response to a question about how the authorities are garnering support from Singaporeans for the significant undertaking despite it being far in the future.
In light of the possibility that some or many of us won’t live to see its protection or advantages, he remarked, certain decisions must be made.