The Rental and Resale Property Markets Show Signs of Slowing
The skyline and iconic esplanade of Central Singapore
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According to National Development Minister Desmond Lee, there are signs that the resale and rental markets are slowing down, although it's still early to confirm. The backlog of delayed Build-To-Order (BTO) flats is expected to take about two years to clear.
Mr. Lee noted that there appears to be a possible plateauing of resale prices, with sellers encountering some resistance from buyers. These trends may be partly attributed to the cooling measures introduced in December 2021 and September 2022, which are still being felt in the market. He discussed these developments in a wide-ranging interview with The Sunday Times on March 20.
As a means of regulating demand for flats, the latest measures introduced a 15-month waiting period for those who downsize from private properties and wish to purchase a HDB resale flat.
Mr. Lee also reported that there has been considerable advancement in clearing the backlog of delayed BTO projects that were impacted by COVID-19.
The HDB has increased its construction efforts, resulting in about 60% completion of 55 delayed BTO projects over the past two years as of March 2023. In 2022, there was a 15% rise in the number of flats completed, with approximately 20,000 flats finished, and around 17,000 buyers received keys, signifying progress towards returning to the pre-pandemic standard of three to four years. Despite the progress made, he noted that there is still work to be done and it will take approximately another two years to clear all the projects that were delayed by the pandemic.
According to Mr. Lee, the HDB is set to launch up to 100,000 flats between 2021 and 2025, indicating that more new flats are in the pipeline. This includes launching additional BTO flats with waiting times of under three years from 2024 onwards. He also stated that around 2,000 to 3,000 of such flats will be released each year by 2025, similar to pre-Covid-19 levels. At the peak of the pandemic, the waiting time for a BTO flat increased to around four to five years, compared to the pre-pandemic average of three to four years.
Mr. Lee has acknowledged that COVID-19 delayed projects have impacted the median waiting times for last year and this year. However, with the resumption of some normalcy and the commencement of BTO flats with waiting times of under three years, the aim is to bring down waiting times and assure people that they don't have to wait too long for their flats.
One of the key issues affecting potential home-seekers has been the high BTO application rates, which have increased significantly since 2020. Mr. Lee reported that the BTO application rates have started to moderate, with the latest February launch drawing fewer first-timer applicants compared to the launches in the last three years. Mr. Lee added that his ministry will continue to monitor the first-timer application rates in the upcoming launches.
According to Mr. Lee, there is typically high interest in new flats when there have not been BTO launches for a long time. In the upcoming May sales exercise, new flats will be launched in Bedok and Serangoon, which have not seen new flats for seven and nine years respectively.
BTO launches usually occur four times a year in February, May, August, and November. Mr. Lee also mentioned that the spike in BTO application rates since 2020 was partly due to the pandemic as potential buyers anticipated construction delays and increased waiting times, causing some to apply earlier than usual.
Mr. Lee acknowledged that during the crisis, people were concerned about their ability to obtain housing, and that the rise in resale prices contributed to this psychological effect. He stated that it is understandable given the circumstances. However, he pointed out that previous crises have led to a reduction in demand, causing markets worldwide to crash, and that this was not the case this time around. Despite the challenges of limited fiscal and land resources, he assured that the government is committed to fulfilling the housing aspirations of Singaporeans.
In his statement, Mr Lee emphasized that providing housing to the nation is ingrained in the Singaporean mindset and social contract. While addressing the challenges and making improvements to the public housing system, he stressed the need to maintain the affordability and accessibility of housing for Singaporeans now and in the future.