Housing prices not expected to rise indefinitely: Minister

Both public and private housing markets show signs of easing, says Desmond Lee

Housing prices in Singapore are not expected to rise indefinitely as signs of moderation are being observed in the public and private housing markets, said National Development Minister Desmond Lee..

Mortgage rates are expected to remain high, which will have an impact on buyers and home owners, Mr Lee added in an interview with The Straits Times and Chinese daily Lianhe Zaobao on Dec 28.

"We expect (interest rates) to remain high for longer, and the rates we see are between 3.7 per cent and 4.4 per cent, 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", Mr 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 per cent 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, Mr 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, Mr 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 Mr Lee.