reporter2
05-07-12, 18:07
http://www.businesstimes.com.sg/specials/property/lower-cov-spurs-resale-flat-demand
Published July 03, 2012
Lower COV spurs resale flat demand
One segment is HDB second-timers who eschew a new unit
By michelle tan
RESALE HDB flats are fast regaining interest among buyers, following several months of declining cash-over-valuation (COV) figures.
Notably, after falling more than 20 per cent in the first quarter, COV paid for HDB resale flats are starting to show signs of stabilising, enticing buyers back into the market, say consultants.
Prices for flats were higher during the second quarter with HDB's flash estimate of the resale price index (RPI) up 1.3 per cent quarter-on-quarter at a high of 194, from 191.6 in the period before.
Said Eugene Lim, key executive officer of ERA Realty Network: "The stronger price growth exhibited could be a result of decreasing COVs and increasing valuations in the market. Valuations are catching up with selling prices and median COVs have been reduced to $25,000 in June 2012. Reduction in COVs encourages buyers to commit to flat purchases resulting in rising resale prices."
Aside from prices, transaction volumes also clawed higher during the quarter, rising 8 per cent from 5,126 in Q1 to 5,549 in Q2, according to data from ERA and SRX.
Industry watchers attribute the jump to a growing number of second-timers opting for a resale unit as opposed to waiting for a BTO (build-to-order) flat as COVs have softened and become comparable to the resale levy that second-timers have to pay when purchasing the latter.
Offering another view, CEO of PropNex Realty Mohamed Ismail commented: "With the moderation of HDB resale prices in 1Q12, buyers who did not qualify under the BTO purchase requirements like the singles, permanent residents, HDB upgraders and downgraders, are still purchasing in this market segment."
Lee Sze Teck, senior manager at DWG's research and consultancy division, said: "Buyers could have also returned to the resale market after failing to land their ideal home in the BTO and Sale of Balance (SBF) flats exercise in March 2012."
In particular, estates such as Woodlands (median resale price $415,000), Jurong West (median resale price $449,000) and Yishun (median resale price $377,000) saw the greatest number of resale transactions during the period, according to ERA research.
Still, some consultants have argued that the current escalation of prices is not sustainable and that prices of resale flats are close to a peak with little room left to grow in coming quarters.
"The RPI has consolidated its high prices and growth will be less than 2 per cent in the next quarter and I will not be surprised to see a negative growth in prices towards the end of 2012," said Mr Ismail.
In the first six months of the year, HDB offered a total of 12,073 flats under BTO exercises and 3,825 flats under an SBF exercise.
The statutory board will also be putting around 5,200 new flats up for sale this month in estates such as Bedok, Bukit Merah, Choa Chu Kang, Clementi, Geylang and Punggol.
Published July 03, 2012
Lower COV spurs resale flat demand
One segment is HDB second-timers who eschew a new unit
By michelle tan
RESALE HDB flats are fast regaining interest among buyers, following several months of declining cash-over-valuation (COV) figures.
Notably, after falling more than 20 per cent in the first quarter, COV paid for HDB resale flats are starting to show signs of stabilising, enticing buyers back into the market, say consultants.
Prices for flats were higher during the second quarter with HDB's flash estimate of the resale price index (RPI) up 1.3 per cent quarter-on-quarter at a high of 194, from 191.6 in the period before.
Said Eugene Lim, key executive officer of ERA Realty Network: "The stronger price growth exhibited could be a result of decreasing COVs and increasing valuations in the market. Valuations are catching up with selling prices and median COVs have been reduced to $25,000 in June 2012. Reduction in COVs encourages buyers to commit to flat purchases resulting in rising resale prices."
Aside from prices, transaction volumes also clawed higher during the quarter, rising 8 per cent from 5,126 in Q1 to 5,549 in Q2, according to data from ERA and SRX.
Industry watchers attribute the jump to a growing number of second-timers opting for a resale unit as opposed to waiting for a BTO (build-to-order) flat as COVs have softened and become comparable to the resale levy that second-timers have to pay when purchasing the latter.
Offering another view, CEO of PropNex Realty Mohamed Ismail commented: "With the moderation of HDB resale prices in 1Q12, buyers who did not qualify under the BTO purchase requirements like the singles, permanent residents, HDB upgraders and downgraders, are still purchasing in this market segment."
Lee Sze Teck, senior manager at DWG's research and consultancy division, said: "Buyers could have also returned to the resale market after failing to land their ideal home in the BTO and Sale of Balance (SBF) flats exercise in March 2012."
In particular, estates such as Woodlands (median resale price $415,000), Jurong West (median resale price $449,000) and Yishun (median resale price $377,000) saw the greatest number of resale transactions during the period, according to ERA research.
Still, some consultants have argued that the current escalation of prices is not sustainable and that prices of resale flats are close to a peak with little room left to grow in coming quarters.
"The RPI has consolidated its high prices and growth will be less than 2 per cent in the next quarter and I will not be surprised to see a negative growth in prices towards the end of 2012," said Mr Ismail.
In the first six months of the year, HDB offered a total of 12,073 flats under BTO exercises and 3,825 flats under an SBF exercise.
The statutory board will also be putting around 5,200 new flats up for sale this month in estates such as Bedok, Bukit Merah, Choa Chu Kang, Clementi, Geylang and Punggol.