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PR Newswire
10-11-2012, 07:37 AM
The Straits Times
www.straitstimes.com
Published on Nov 10, 2012
Cash premium for HDB resale flats rises again
By daryl chin and rachel chang
THE cash premium that buyers of HDB resale flats pay on top of valuation has continued to climb in the fourth quarter after it had risen in the third quarter.
The COV, or cash over valuation, had fallen for three straight quarters before the third quarter.
Numbers from data-crunching firm Singapore Real Estate Exchange (SRX), which collates sales from major property agencies, indicate that overall cash premiums have climbed to $33,000 now, compared to $30,000 in the previous quarter.
In the same time period, the overall median resale price also rose 1.1 per cent to $455,000.
Analysts point to two possible reasons: fewer HDB resale flats on the market as well as sellers sticking to higher asking prices.
PropNex chief executive Mohamed Ismail said the number of resale flats has gradually fallen due to policy tweaks. Chief among them, he noted, are the greater restrictions linked to a second concessionary HDB loan, implemented in 2010, which requires buyers to use 50 per cent of the cash proceeds of the sale of their existing flat to buy the next.
"These buyers are left with little to cash out from their first investment as they have to plough 50 per cent into the second flat, and use the remaining amount for cash premiums and agency fees," he said.
The number of resale transactions logged by the Housing Board fell from 37,205 in 2009 to 24,633 last year.
Mr Tan Kok Keong, head of OrangeTee's research and consultancy, said another possible reason is the rise in private property prices which has caused aspiring HDB upgraders to stay put.
As for rising COVs, Dennis Wee Group spokesman Lee Sze Teck said this is due to sellers not budging on asking prices following record transactions recently.
It was reported in September that an HDB flat had hit the $1 million mark for the first time. The executive unit in Queenstown had a cash premium of $195,000. "Sellers are holding out for a good deal, and taken together with the limited resale supply, this helped maintain resale prices," he said.
While the HDB is launching a record 27,000 Build-To-Order flats this year, ERA Realty key executive officer Eugene Lim noted that demand from second-timers, or those who have already enjoyed a housing subsidy, is still not being met.
Currently, about 5 per cent of new flats in well-developed towns is reserved for this group, and the quota rises to 15 per cent in less-developed towns.
"The BTO supply is satisfying demand from first-timers while second-timers, permanent residents and singles have to go to the HDB resale market," he said.
Mr Nicholas Mak, head of research at property consultancy SLP International, said the record supply of new flats may have contributed to rising COVs. The new BTO launches have soaked up buyers with limited budgets and those "left in the resale market are actually buyers who can afford to pay a higher COV".
Mr Tan added that the resale market is likely to cool down in a few years when buyers get the keys to their BTO homes. "Demand and prices are pushed up because people need houses to stay right now. The impact of new BTOs and all the other measures will only come later when these units are completed."
darylc@sph.com.sg
rchang@sph.com.sg
www.straitstimes.com
Published on Nov 10, 2012
Cash premium for HDB resale flats rises again
By daryl chin and rachel chang
THE cash premium that buyers of HDB resale flats pay on top of valuation has continued to climb in the fourth quarter after it had risen in the third quarter.
The COV, or cash over valuation, had fallen for three straight quarters before the third quarter.
Numbers from data-crunching firm Singapore Real Estate Exchange (SRX), which collates sales from major property agencies, indicate that overall cash premiums have climbed to $33,000 now, compared to $30,000 in the previous quarter.
In the same time period, the overall median resale price also rose 1.1 per cent to $455,000.
Analysts point to two possible reasons: fewer HDB resale flats on the market as well as sellers sticking to higher asking prices.
PropNex chief executive Mohamed Ismail said the number of resale flats has gradually fallen due to policy tweaks. Chief among them, he noted, are the greater restrictions linked to a second concessionary HDB loan, implemented in 2010, which requires buyers to use 50 per cent of the cash proceeds of the sale of their existing flat to buy the next.
"These buyers are left with little to cash out from their first investment as they have to plough 50 per cent into the second flat, and use the remaining amount for cash premiums and agency fees," he said.
The number of resale transactions logged by the Housing Board fell from 37,205 in 2009 to 24,633 last year.
Mr Tan Kok Keong, head of OrangeTee's research and consultancy, said another possible reason is the rise in private property prices which has caused aspiring HDB upgraders to stay put.
As for rising COVs, Dennis Wee Group spokesman Lee Sze Teck said this is due to sellers not budging on asking prices following record transactions recently.
It was reported in September that an HDB flat had hit the $1 million mark for the first time. The executive unit in Queenstown had a cash premium of $195,000. "Sellers are holding out for a good deal, and taken together with the limited resale supply, this helped maintain resale prices," he said.
While the HDB is launching a record 27,000 Build-To-Order flats this year, ERA Realty key executive officer Eugene Lim noted that demand from second-timers, or those who have already enjoyed a housing subsidy, is still not being met.
Currently, about 5 per cent of new flats in well-developed towns is reserved for this group, and the quota rises to 15 per cent in less-developed towns.
"The BTO supply is satisfying demand from first-timers while second-timers, permanent residents and singles have to go to the HDB resale market," he said.
Mr Nicholas Mak, head of research at property consultancy SLP International, said the record supply of new flats may have contributed to rising COVs. The new BTO launches have soaked up buyers with limited budgets and those "left in the resale market are actually buyers who can afford to pay a higher COV".
Mr Tan added that the resale market is likely to cool down in a few years when buyers get the keys to their BTO homes. "Demand and prices are pushed up because people need houses to stay right now. The impact of new BTOs and all the other measures will only come later when these units are completed."
darylc@sph.com.sg
rchang@sph.com.sg
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