Private Residential Property Prices
Private home prices saw a more moderate increase of 3.9% in 2024, compared to 6.8% in 2023 and 8.6% in 2022.
Q4 2024 itself saw a 2.3% rise, driven by strong new launch sales.
Looking ahead, we expect moderate growth of 3-6% in 2025, supported by lower interest rates, strong household balance sheets, low unsold inventory and an attractive pipeline of new launches which could set benchmark prices.
Supply of Private Housing
The Government increased the overall private housing supply in the Government Land Sales (GLS) Programme from about 8,140 units in 2H2024 to 8,505 units in 1H2025.
This is almost 60% higher than the average in the Confirmed List from 2021 to 2023.
From this, we can see that the government is trying to ensure there is sufficient supply to match the demand for housing, maintaining market stability.
Resale HDB Prices
Prices for 2024 rose by 9.6%, double the 4.9% gain in 2023.
The pace in Q4 2024 slowed down to 2.5% compared with the 2.7% recorded in Q3 2024, as the cooling measures implemented in August 2024 (lowering LTV from 80% to 75%) have started to impact growth.
To understand how prices would move in 2025, we need to look at the supply of flats.
Supply of HDB
HDB launched a total of 21,225 new flats in 2024. In February 2025, it will launch about 5,000 BTO flats and more than 5,500 Sale of Balance Flats.
Basically, lots of supply coming up.
However, some may still turn to resale flats due to the new resale restrictions of Plus and Prime BTO flats.
Also, 6,976 flats are projected to reach MOP in 2025 – a 41.6% decline from the 11,952 flats expected to become eligible in 2024. This will contribute to tighter market supply in 2025.
We can expect resale prices to continue rising at a slower pace amidst robust demand and limited supply.
Interest Rates
US Fed lowered rates on 18th December 2024, but signalled a slower pace of cuts ahead, as uncertainty grows over inflation and Donald Trump’s economic plans.
Inflation forecast for 2025 is also raised from 2.1% to 2.5%, which lessens the likelihood of the Fed cutting rates further.
Two quarter-point rate cuts in 2025 are forecasted, down from an earlier prediction of four.
So, while we expect interest rates to fall further, the downside impact we are expecting on mortgage rates is limited.
