New Homes Could See a Surge in Demand in 2025 – What’s Driving It?

As 2024 drew to a close, the Fed’s interest rate cuts emerged as a key topic in real estate, having played a crucial role in spurring demand and sales of new private homes during the closing months of the year. As we enter 2025, additional factors are expected to drive primary market sales, including both transactions and the supply of newly-completed homes. 

For starters, historical transaction data shows that shorter holding periods are increasingly becoming the norm, particularly among owners of private homes which have just attained their Temporary Occupation Permit (TOP). Between 2015 to 2020, the typical holding period for such newly-completed homes was 4 to 6 years, before it shrank to 3 to 4 years from 2021 onwards. 

While this growing trend indicates that investors are now more willing to release their TOP properties in an even shorter period of time, it also increases the likelihood that fewer of these newly-completed homes will remain available as market activity in this segment picks up. Consequently, buyers interested in new properties may have to shift their attention to the primary market instead. 

Another factor that could drive more buyers towards the primary market in 2025 is the sharp decline in newly-completed residential properties this year. 

Since 2023, an influx of newly-completed homes has drawn buyers away from the new home market. These newly-completed homes are in pristine condition and are ready to move in, making them popular with buyers who have immediate housing needs. 

But with completions set to taper down from 10,600 units to some 5,800 private homes in 2025, resulting in a tighter supply for resale and subsale units. Therefore, buyers may find themselves compelled to explore the new home market instead.

Consequently, this trend translates into fewer opportunities for consumers to purchase newly-completed private homes in the foreseeable future, leaving those interested in owning a fresh property to turn to the new sale market, which will see approximately 14,000 units launched this year.