mr funny
25-08-11, 02:42
http://www.straitstimes.com/Singapore/Story/STIStory_704591.html
Sellers lower COV expectations
Fewer first-time buyers expected in resale market, due to new HDB rules
Published on Aug 22, 2011
By Jessica Cheam, Housing Correspondent
HOME owners hoping to sell their Housing Board flats seem to have tempered their expectations of reaping eye-popping cash premiums, after the HDB raised the income ceiling for new flats and housing subsidies.
The new rules, which open up more housing options for couples, singles and the elderly, are expected to change the mix of HDB resale flat buyers, say property agents.
With these three groups possibly going for new flats instead of buying homes off the resale market, sellers are lowering their expectations of getting a tidy amount in cash-over-valuation (COV), the sum paid by buyers above the valuation of a flat.
C&H Properties real estate agent Daniel Tan said: 'Before, it was the standard for many sellers to ask for $50,000 to $80,000 for COV. Now, many of them have lowered this to below $50,000.'
Four-room and five-room flats up for resale in Woodlands, Ang Mo Kio and Bedok have registered dips in their asking COV amounts, he added.
This trend seems to be in response to the raising of the income ceiling from $8,000 to $10,000 for couples looking to buy new HDB build-to-order flats or to apply for the Central Provident Fund housing grant or an HDB loan. The HDB has also raised the income ceiling for executive condominium units from $10,000 to $12,000, and raised the income ceilings for singles and elderly people too.
Industry observers told The Straits Times that although it is still early days, since the new rules kicked in only last week, they expect the number of first-time buyers in the HDB resale market to shrink, as they can now also go for new flats or executive condominium units.
National Development Minister Khaw Boon Wan had previously revealed on his blog that the proportion of first-time home buyers in the HDB resale flat market was about a quarter, or 23 per cent; among singles, it was 15 per cent.
At roughly 30,000 resale flats changing hands each year on average, this means about 7,500 first-time buyers could potentially move to the HDB's queue for new flats.
ERA Realty key executive officer Eugene Lim estimates that 30 per cent to 40 per cent, or up to 3,000 of these buyers, could switch over each year.
This group is likely to include couples who do not need housing urgently and whose combined monthly income hovers just above the $8,000 level, which previously barred them from buying new HDB flats.
But Dennis Wee Group director Chris Koh thinks the proportion will be lower - perhaps 10 per cent.
He said: 'The primary reason is that first-time buyers will still be attracted to resale flats because they won't need to wait three years for their home.'
And because the HDB has also lifted the ceiling for the CPF housing grant, more buyers can now take advantage of this to buy a resale flat, he added.
But both Mr Lim and Mr Koh agreed that more singles above age 35 could enter the resale market now, as more of them qualify for the HDB's revised $15,000 grant for singles earning up to $5,000.
However, the number will not be significant enough to move overall price trends, they added.
The overall effect of the new rules on the market is that COVs could now cool and moderate the rate of price increases in the resale market.
But Mr Lim cautioned buyers against expecting prices to start falling any time soon, because the supply crunch in the resale market still exists; it will take some time for the HDB's new flat supply to reach the market before it will cool.
The resale market will still be supported by other buyers, such as permanent residents who prefer buying to renting, and private property owners cashing out of their private homes and downgrading to public housing.
'With more new flats, some resale buyers will swing over, but we do not expect an exodus... At the rate at which things are moving, the only thing that can bring down overall COV and resale prices is a recession,' he said.
PropNex chief executive Mohamed Ismail predicts there will still be real demand for housing in the next six months, although the HDB's record-high launch of 8,000 new flats slated for next month may meet some of it.
'Overall, resale HDB prices will still increase marginally, but as supply comes on, the overall housing situation should stabilise,' he said.
Mr Ong Teck Hui, Credo Real Estate's head of research and consultancy, noted that the change in the profile of buyers in the HDB resale market will have a knock-on effect on the private market.
'But the main threat is the potential softening of the economy arising from deterioration in external conditions. If it is a significant slowdown, we may expect demand to moderate, leading to an easing of COV and resale prices.'
[email protected]
Sellers lower COV expectations
Fewer first-time buyers expected in resale market, due to new HDB rules
Published on Aug 22, 2011
By Jessica Cheam, Housing Correspondent
HOME owners hoping to sell their Housing Board flats seem to have tempered their expectations of reaping eye-popping cash premiums, after the HDB raised the income ceiling for new flats and housing subsidies.
The new rules, which open up more housing options for couples, singles and the elderly, are expected to change the mix of HDB resale flat buyers, say property agents.
With these three groups possibly going for new flats instead of buying homes off the resale market, sellers are lowering their expectations of getting a tidy amount in cash-over-valuation (COV), the sum paid by buyers above the valuation of a flat.
C&H Properties real estate agent Daniel Tan said: 'Before, it was the standard for many sellers to ask for $50,000 to $80,000 for COV. Now, many of them have lowered this to below $50,000.'
Four-room and five-room flats up for resale in Woodlands, Ang Mo Kio and Bedok have registered dips in their asking COV amounts, he added.
This trend seems to be in response to the raising of the income ceiling from $8,000 to $10,000 for couples looking to buy new HDB build-to-order flats or to apply for the Central Provident Fund housing grant or an HDB loan. The HDB has also raised the income ceiling for executive condominium units from $10,000 to $12,000, and raised the income ceilings for singles and elderly people too.
Industry observers told The Straits Times that although it is still early days, since the new rules kicked in only last week, they expect the number of first-time buyers in the HDB resale market to shrink, as they can now also go for new flats or executive condominium units.
National Development Minister Khaw Boon Wan had previously revealed on his blog that the proportion of first-time home buyers in the HDB resale flat market was about a quarter, or 23 per cent; among singles, it was 15 per cent.
At roughly 30,000 resale flats changing hands each year on average, this means about 7,500 first-time buyers could potentially move to the HDB's queue for new flats.
ERA Realty key executive officer Eugene Lim estimates that 30 per cent to 40 per cent, or up to 3,000 of these buyers, could switch over each year.
This group is likely to include couples who do not need housing urgently and whose combined monthly income hovers just above the $8,000 level, which previously barred them from buying new HDB flats.
But Dennis Wee Group director Chris Koh thinks the proportion will be lower - perhaps 10 per cent.
He said: 'The primary reason is that first-time buyers will still be attracted to resale flats because they won't need to wait three years for their home.'
And because the HDB has also lifted the ceiling for the CPF housing grant, more buyers can now take advantage of this to buy a resale flat, he added.
But both Mr Lim and Mr Koh agreed that more singles above age 35 could enter the resale market now, as more of them qualify for the HDB's revised $15,000 grant for singles earning up to $5,000.
However, the number will not be significant enough to move overall price trends, they added.
The overall effect of the new rules on the market is that COVs could now cool and moderate the rate of price increases in the resale market.
But Mr Lim cautioned buyers against expecting prices to start falling any time soon, because the supply crunch in the resale market still exists; it will take some time for the HDB's new flat supply to reach the market before it will cool.
The resale market will still be supported by other buyers, such as permanent residents who prefer buying to renting, and private property owners cashing out of their private homes and downgrading to public housing.
'With more new flats, some resale buyers will swing over, but we do not expect an exodus... At the rate at which things are moving, the only thing that can bring down overall COV and resale prices is a recession,' he said.
PropNex chief executive Mohamed Ismail predicts there will still be real demand for housing in the next six months, although the HDB's record-high launch of 8,000 new flats slated for next month may meet some of it.
'Overall, resale HDB prices will still increase marginally, but as supply comes on, the overall housing situation should stabilise,' he said.
Mr Ong Teck Hui, Credo Real Estate's head of research and consultancy, noted that the change in the profile of buyers in the HDB resale market will have a knock-on effect on the private market.
'But the main threat is the potential softening of the economy arising from deterioration in external conditions. If it is a significant slowdown, we may expect demand to moderate, leading to an easing of COV and resale prices.'
[email protected]