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28-04-2012, 06:54 AM
The Straits Times
Apr 28, 2012
Cash premiums for HDB resale flats fall about 30%
Bumper crop of new flats takes buyers away from resale market
By Rachel Chang
THE cash premiums payable to buy resale HDB flats fell significantly in less popular estates like Pasir Ris and Woodlands last quarter, making them more affordable now to buyers.
Known as 'cash over valuation (COV)', the premiums also fell in mature estates like Hougang, Bedok and Clementi, due to the injection of new flats in these areas over the last few months by the Government, said analysts.
The falls in COV come as prices of HDB resale flats inched up 0.6 per cent in the first quarter of the year, the slowest pace of increase since 2009.
While HDB resale prices are still at an all-time high, the latest rise is less than half the 1.7 per cent clocked in the quarter before.
A total of 5,892 resale flats changed hands in the first three months of the year, down 0.5 per cent from 5,921 in the quarter before.
Most of these flats attracted COV, which is the amount a buyer pays over and above the valuation of an HDB resale flat. As it must be paid in cash, it has a significant impact on affordability.
While HDB has stopped providing a nationwide median of COVs, data collated from real estate agencies showed that overall, cash premiums fell about 30 per cent in the first quarter of this year, compared with 10 per cent the quarter before.
This is partly because a bumper crop of new flats has taken buyers away from the resale market, said observers. About 8,000 units have been offered since the year began, with 5,000 more scheduled next month.
A move last month to reserve a higher percentage of new executive condominium units for second-timers also changed buyer behaviour.
'If people can buy Build-to-Order (BTO) flats, they will buy,' said Mr Lee Sze Teck, senior manager of research and consultancy at Dennis Wee Group. 'Resale flats are for those who don't qualify, or who cannot wait.'
'The assurance that there's enough supply for those who want to buy flats has hit home,' noted HSR Property Group special adviser Donald Han. 'The masses have gotten the message.'
The falls were particularly steep in outlying areas like Pasir Ris and Woodlands, according to HDB's quarterly report, which was released yesterday.
COVs have fallen to a median of $20,000 for three-, four- and five-room flats in Woodlands.
And the biggest fall in COVs was for executive flats in Pasir Ris. In the first quarter, the median COV for such a flat was $35,000, down by almost half from the $58,000 it reached in the quarter before.
COVs held up relatively well, however, in popular estates like Queenstown, Bukit Merah and Toa Payoh.
The median COV for a three-room flat in Queenstown fell only $4,500 to $25,500, while the median COV for a four-room flat held steady at $50,000.
'The central locations still collect a premium,' said director of Chris Koh International, Mr Chris Koh. 'But for the rest of the towns in the outskirts, the COV is coming down quite quickly.'
Singapore's small size means that cash premiums across the island will eventually fall or rise in a largely uniform fashion, said agents and analysts. They expect COVs to continue to fall gradually through the next two quarters.
'COVs are still under tremendous pressure,' said C&H Properties key executive officer Albert Lu. 'People will continue to opt for BTO flats.'
Next month, HDB will offer 4,640 BTO flats for sale in six projects spread over the four towns of Choa Chu Kang, Kallang/Whampoa, Punggol and Sengkang.
It has said that it will offer a total of 25,000 new flats altogether this year.
COVs are likely to stabilise soon because buyers who were unwilling or unable to pay high cash premiums will eventually return to the resale market, said ERA Realty key executive officer Eugene Lim.
There are already signs of a pick-up in resale transactions this month, he said.
According to ERA's agents, waiting time for a first appointment with HDB after a deal is made has grown to about five weeks, up from the three weeks it averaged at the start of the year.
Yesterday's data also showed that 41,200 HDB flats were approved for subletting between January and last month, compared with 40,000 in the three months before.
rchang@sph.com.sg
Apr 28, 2012
Cash premiums for HDB resale flats fall about 30%
Bumper crop of new flats takes buyers away from resale market
By Rachel Chang
THE cash premiums payable to buy resale HDB flats fell significantly in less popular estates like Pasir Ris and Woodlands last quarter, making them more affordable now to buyers.
Known as 'cash over valuation (COV)', the premiums also fell in mature estates like Hougang, Bedok and Clementi, due to the injection of new flats in these areas over the last few months by the Government, said analysts.
The falls in COV come as prices of HDB resale flats inched up 0.6 per cent in the first quarter of the year, the slowest pace of increase since 2009.
While HDB resale prices are still at an all-time high, the latest rise is less than half the 1.7 per cent clocked in the quarter before.
A total of 5,892 resale flats changed hands in the first three months of the year, down 0.5 per cent from 5,921 in the quarter before.
Most of these flats attracted COV, which is the amount a buyer pays over and above the valuation of an HDB resale flat. As it must be paid in cash, it has a significant impact on affordability.
While HDB has stopped providing a nationwide median of COVs, data collated from real estate agencies showed that overall, cash premiums fell about 30 per cent in the first quarter of this year, compared with 10 per cent the quarter before.
This is partly because a bumper crop of new flats has taken buyers away from the resale market, said observers. About 8,000 units have been offered since the year began, with 5,000 more scheduled next month.
A move last month to reserve a higher percentage of new executive condominium units for second-timers also changed buyer behaviour.
'If people can buy Build-to-Order (BTO) flats, they will buy,' said Mr Lee Sze Teck, senior manager of research and consultancy at Dennis Wee Group. 'Resale flats are for those who don't qualify, or who cannot wait.'
'The assurance that there's enough supply for those who want to buy flats has hit home,' noted HSR Property Group special adviser Donald Han. 'The masses have gotten the message.'
The falls were particularly steep in outlying areas like Pasir Ris and Woodlands, according to HDB's quarterly report, which was released yesterday.
COVs have fallen to a median of $20,000 for three-, four- and five-room flats in Woodlands.
And the biggest fall in COVs was for executive flats in Pasir Ris. In the first quarter, the median COV for such a flat was $35,000, down by almost half from the $58,000 it reached in the quarter before.
COVs held up relatively well, however, in popular estates like Queenstown, Bukit Merah and Toa Payoh.
The median COV for a three-room flat in Queenstown fell only $4,500 to $25,500, while the median COV for a four-room flat held steady at $50,000.
'The central locations still collect a premium,' said director of Chris Koh International, Mr Chris Koh. 'But for the rest of the towns in the outskirts, the COV is coming down quite quickly.'
Singapore's small size means that cash premiums across the island will eventually fall or rise in a largely uniform fashion, said agents and analysts. They expect COVs to continue to fall gradually through the next two quarters.
'COVs are still under tremendous pressure,' said C&H Properties key executive officer Albert Lu. 'People will continue to opt for BTO flats.'
Next month, HDB will offer 4,640 BTO flats for sale in six projects spread over the four towns of Choa Chu Kang, Kallang/Whampoa, Punggol and Sengkang.
It has said that it will offer a total of 25,000 new flats altogether this year.
COVs are likely to stabilise soon because buyers who were unwilling or unable to pay high cash premiums will eventually return to the resale market, said ERA Realty key executive officer Eugene Lim.
There are already signs of a pick-up in resale transactions this month, he said.
According to ERA's agents, waiting time for a first appointment with HDB after a deal is made has grown to about five weeks, up from the three weeks it averaged at the start of the year.
Yesterday's data also showed that 41,200 HDB flats were approved for subletting between January and last month, compared with 40,000 in the three months before.
rchang@sph.com.sg
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