Source: TODAY Online

Prices of HDB resale flats have been climbing for three quarters, the last two at more than 3 per cent each. Now, the rate of growth has slowed to 2.7 per cent in the first three months of this year.

And the median cash over valuation (COV) amount – after doubling in the fourth quarter – has risen by just $1,000 to $25,000, while resale volume headed south for two consecutive quarters.

Could this, coming after recent property cooling measures by the Government, be a sign that resale prices are encountering buyer resistance?

It is the first possible indication that resale prices may not rise by as much as they did last year, property experts told MediaCorp, but it is still a wait-and-see situation.

“It’s the right signal; it shows prices are growing at a slower pace,” said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

The number of Built-to-Order (BTO) flats to be launched by HDB this year is also expected to take some steam off the resale market, said Mr Eugene Lim, associate director of ERA Asia Pacific.

But, he added, demand still outstrips supply: “The demand for resale flats comes predominantly from upgraders, downgraders and permanent residents because of their immediate housing needs.”

The HDB announced it will launch this month 1,200 BTO flats in Punggol and, from May to September, another 7,400 BTO flats in areas such as Sengkang, Jurong West, Yishun, Bukit Panjang and Woodlands.

But some, like sales manager Sri Aran, cannot wait three years for a new flat. He plans to upgrade from his three-room flat to a five-roomer, as his 16-year-old son now shares a room with his grandfather, but is concerned about rising resale prices.

While it makes more sense for first-time households to buy direct from the HDB as there is no COV, these buyers could “return to the resale market with a vengeance” since the rejection rate of BTOs is about 50 per cent, said Chesterton Suntec International’s head of research and consultancy Colin Tan.

However, the estimated number of resale transactions for the first quarter fell by 5 per cent, after a 23-per-cent drop in the fourth quarter. Mr Mak attributed this to slower sales during the Chinese New Year holiday and the gradual effects of the cooling measures.

Mr Lim agreed: “We need to watch Q2 and Q3, which tend to experience a lot more market activity.”

Property consultants expect resale prices to rise between 5 and 10 per cent this year. The Resale Price Index has risen by 3.5 per cent annually, on average, since 2000. Last year’s hike was 8.2 per cent.

Source: Today Online

Many of those who sold their HDB flats in the fourth quarter of last year had plenty to cheer about: Not only were they able to sell their flats at even higher prices; the owners also received more cash upfront from their buyers.

Prices of resale HDB flats rose 3.9 per cent between October and December, bringing the full year increase to 8.2 per cent. The latest statistics from the Housing Board show that 93 per cent of resale transactions in the fourth quarter were above valuation. And the median cash-over-valuation (COV) paid by home buyers jumped by 100 per cent – from $12,000 in Q3 to $24,000 in Q4.

Real Estate lecturer at Ngee Ann Polytechnic, Mr Nicholas Mak, said the increase may be due to more sales involving larger flats.

“There seems to be more families that are going in to buy larger flats — your four-room and five-room flats. As a result, these larger flats also come with higher cash-over-valuation amount which, in a way, pulls up that median cash-over-valuation.”

But this increase is unlikely to continue indefinitely. The HDB noted that the median COV amount had stabilised in recent months. The cash premium for the first half of this month (subs: Jan) has come down slightly to $22,000.

Some analysts believe this may indicate that the market is approaching a limit. Mr Mak said: “Our salary is still not catching up at such a high rate, there will be a certain time when the affordability issue will come into play. “As the sellers start to demand higher and higher COV … there may come a stage when there will be some buyer resistance.”

Efforts by the Government to raise the supply of new homes will also gradually help to cool the market once the flats are completed, said Mr Colin Tan, head of Research for Chesterton Suntec International.

“The Government’s efforts at pushing out the BTOs (build-to-order) and DBSS (Design, Build and Sell Scheme), and all the executive condos, that may have helped to allay some of the panic buying. And this probably resulted in some people actually shifting the demand from the resale market to the new flats,” Mr Tan added.

To meet demand, the HDB said that it will be offering nearly 7,000 new flats in the first half of this year. The flats will be built in areas such as Sengkang, Sembawang, Punggol, Yishun and Jurong West.

HDB Urges Caution

Cash-over-Valuation making headline again. Stories of $50K to $100K COV give news organisation added sensations. First, it did not happen. Second, if such transactions do occur, they do not represent the entire HDB Resale activities. Genuine buyers and sellers should not get emotionally excited. Latest Prices is our attempt to aggregate/source actual resale transactions. However success depends on your willingness to share.

Source: Channel News Asia

Housing analysts said it is a sellers’ market right now, with resale flats being a hot commodity lately.

But the Housing and Development Board (HDB) has urged buyers to exercise caution when paying high cash premiums, and to do their homework to determine if a house is truly worth its asking price.

A 4-room flat in Bishan was recently put up for sale. It was valued at S$460,000 by an independent valuer appointed by HDB, and the owners are asking for an additional S$100,000 cash-over-valuation (COV). The owners, who declined to be named, are a young couple in their 30s who run an F&B business. They claimed to have received three offers so far, but all were rejected.

“The COV is too low. There are those who are asking for S$50,000 to S$60,000. There was one offer which was close, about S$95,000. We are not in urgent need to sell. In a way, it’s to test the market. If we sell, we sell. If we don’t sell, we will just continue to stay,” said the owner of the 4-room flat in Bishan. Analysts said with a continued strong demand for resale flats, owners are taking advantage of the situation to increasingly ask for higher prices.

Based on the latest HDB figures, 78 per cent of home sales transacted in the third quarter of last year were above valuation. That is a 22 percentage-point jump from the second quarter of last year’s figure of 57 per cent. The median COV is also on the rise – jumping from S$3,000 in the second quarter to S$12,000 in Q3. With HDB resale flat prices hitting an all-time high, housing agents said most flats now command at least S$20,000 to S$30,000 cash-over-valuation.

Units situated at good locations, close proximity to an MRT station and good renovation can see COV go up to S$50,000 to S$70,000. But there is a limit to how much buyers are willing to pay. “If it’s not to my liking, then I’d have to do up, (renovate) it again. So how much (am I willing to pay)? About S$50 to S$60,000,” said one member of the public.

“It’s too high for me. Because of my income, I don’t think I can afford it,” said another.
HDB said only four out of the 13,000 4-room flats sold last year had premiums higher than S$70,000. Analysts cautioned against jumping into deals that require high cash premiums.

“COV is a premium. Five years down the line, the renovation will deteriorate. And there’s no guarantee that you can sell at S$100,000 above the then value. Therefore, buyers should exercise discretion as far as how high you want to pay,” said Mohamed Ismail, CEO of PropNex.

HDB said it does not control resale flat prices as they are the result of negotiations between willing buyers and sellers. It added that intervening in COV means forcing people to buy and sell at fixed prices. HDB also urge buyers to have the relevant information before negotiating with sellers, and to offer a price within their means.