There continues to be a significant number of buyers supporting transactions for million-dollar government flats in the Singapore property market. Some of these buyers seek larger units closer to the city center, such as Executive Maisonettes.
Additionally, the newly launched Prime Location Housing, despite its prime location, comes with resale restrictions. Consequently, certain buyers may opt for resale flats, thereby boosting the transaction volume for million-dollar flats.
Furthermore, there is a group of private property owners who met the new conditions as of September 2022 but must wait for 15 months before purchasing resale flats. This implies that they can enter the market earliest in January 2024.
Real estate experts, however, believe that these buyers are unlikely to significantly impact resale prices, as many of them have successfully appealed or purchased smaller resale flats.
Nevertheless, the supply and prices of resale flats are influenced by various factors, including economic conditions and prospects. According to Minister for National Development Lawrence Wong, the economic outlook for Singapore remains weak in the short term, influenced by the global economic environment.
Increasing conflicts and tensions globally are expected to slow down global economic activity in 2024. This may affect the financial capability of homebuyers, making them more cautious about property purchases.
Additionally, mortgage interest rates are a crucial factor influencing buyer behavior and market prices. According to Wong's forecast, Singapore's mortgage rates are expected to remain between 3.7% and 4.4% in the foreseeable future. This will not only impact current mortgage-paying homeowners but also make potential buyers more cautious.
Based on data from real estate websites 99.co and the Singapore Real Estate Exchange (SRX), the rate of increase in resale flat prices is expected to slow down. The estimated price increase for resale flats for the entire previous year was 5.8%, 3 percentage points less than 2022. In December, resale flat prices increased by 0.6%, marking the eighth consecutive month with an increase below 1%.
Furthermore, the COVID-19 pandemic has also had a certain impact on the real estate market, leading to supply and demand imbalances. Wong revealed that the Housing and Development Board is addressing projects affected by the pandemic, with around 80% of them already completed.
As per the government's commitment, around 100,000 Build-to-Order (BTO) units are expected to be launched by 2025. By the end of 2023, approximately 63,000 units have been launched, with an additional 19,600 units expected to be completed in 2024. This implies that buyers who are not in urgent need of property can choose to purchase BTO units, reducing the demand for resale flats and stabilizing prices.
