Tight supply of homes to ease in 2023, price growth moderated after cooling measures: Desmond Lee

Cooling measures were introduced to moderate demand in the property market and encourage prudent borrowing in September 2022. PHOTO: ST FILE

SINGAPORE - Price growth in both the private and Housing Board resale markets moderated in the fourth quarter of 2022, as transaction volumes dropped following property cooling measures, said National Development Minister Desmond Lee.

“We can expect tightness to further ease, as the additional public and private housing supply is made available for sale,” he told a seminar by the Building and Construction Authority and the Real Estate Developers’ Association of Singapore at Grand Copthorne Waterfront Hotel on Thursday.

Although the Government has ramped up the supply of Build-To-Order (BTO) flats and private housing, uncertainties could weigh on Singapore’s economy in 2023, he said.

The international outlook remains troubled, with geopolitical tensions heightening and economic downturns in the United States and European Union, Mr Lee said, adding that the housing markets in Australia, the US, Britain and Hong Kong are seeing significant slowdowns.

“That said, given our track record, investors may also remain bullish on our property market as economies reopen.”

The HDB launched more than 23,000 BTO flats in 2022 and will launch up to 23,000 more in 2023.

The supply of private homes under the government land sales programme has also been ramped up to 6,300 units in 2022 and 4,100 units in the first half of 2023, Mr Lee added.

He said Singapore’s property market stayed buoyant despite the pandemic as owner-occupier demand remained firm, supported by resident wage growth.

But if left unchecked, prices could run ahead of economic fundamentals, and this raises the risk of a destabilising correction later on, while borrowers would be vulnerable to the sharp rise in interest rates, he added.

“While we have tightened maximum loan quantum limits, housing loans remain the largest component of household debt in general. If global interest rates continue to rise in response to inflationary pressures, we can expect further increases in domestic mortgage rates,” he said.

“This will make it more difficult for existing and new borrowers to service their loans.”

In September 2022, cooling measures were introduced to moderate demand in the property market and encourage prudent borrowing.

These include a tightened loan-to-value limit of 80 per cent for HDB loans, and an interest rate floor of 3 per cent for HDB loan eligibility letter applications from Sept 30. Private home owners who wish to buy HDB resale flats are now subjected to a 15-month wait after selling their homes.

This came after previous curbs in December 2021 raised additional buyer’s stamp duty rates from 12 per cent to 17 per cent for citizens buying their second residential property, and from 15 per cent to 25 per cent for those buying their third and subsequent ones.

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