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11-10-13, 12:11
http://www.businesstimes.com.sg/specials/property/cov-hdb-resale-flats-hits-four-year-low-20131011
Published October 11, 2013
COV for HDB resale flats hits four-year low
But overall prices up 0.2% in Sept, Real Estate Exchange flash figures show
By Mindy Tan [email protected]
CASH-OVER-VALUATION (COV) for resale flats extended their decline last month, shedding another $3,000 to hit $15,000 - the lowest level since July 2009, according to flash estimates released by the Singapore Real Estate Exchange yesterday.
Despite this, overall resale public-housing prices inched up 0.2 per cent last month, reversing four consecutive declines in the preceding months.
ERA's key executive officer Eugene Lim said that he expected COVs to continue moderating in coming months given the impact of the cooling measures and the increase in new flat supply.
"We are likely to see a median of around $10,000 by year-end," said Mr Lim. "With lower COVs, lower resale transaction prices are expected . . . We can expect prices to continue moderating in the fourth quarter and quite possibly the first quarter of next year when transactions are traditionally slower due to the festive period," he added.
While sellers of three-room and four-room flats with less attractive attributes are generally more accommodating because they are worried that if they do not lock in their buyers now, COVs will dip some more, prices of flats in mature estates with good attributes are still holding their own because of scarcity and high demand.
Notably, demand for smaller and average size flats generally held firm or even improved slightly while interest in five-room and executive flats was muted as the new mortgage servicing ratio (MSR) cap meant that fewer buyers can secure large loans, said Ong Kah Seng, director at R'ST Research.
"For the remainder of the year, COVs and prices will continue to moderate marginally and COV has the potential to reach an average of about $12,000 by year-end," predicted Mr Ong.
Resale transaction prices are expected to see dips of up to 2 per cent in Q4, he added.
However, transaction volumes are expected to be below 20,000 in 2013, the lowest in the history of the HDB resale market, said Mr Lim.
This stems from the lowering of the MSR cap to 30 per cent, and changes in government policies, such as allowing singles to buy Build-To-Order flats and requiring permanent residents to wait for three years before purchasing a resale flat. In addition, the Housing and Development Board (HDB) has been actively rolling out new flats to meet pent-up demand.
Already, transaction volumes have fallen. Last month, an estimated 1,164 resale flats were bought, compared with 1,193 flats the month before. Between July and September this year, an estimated 3,661 resale flats changed hands, down 33 per cent from a year earlier.
The same drop in year-on-year transactions was seen in the private resale arena, where some 1,478 units were picked up between July and September this year, a drop of 57 per cent compared with last year. About 462 non-landed homes changed hands last month, compared with 447 in August.
Meanwhile, resale prices of non-landed homes slipped 1.6 per cent last month, led by a 3.5 per cent drop in the Rest of Central Region (RCR) and followed by a 1.5 per cent drop in the Outside Central Region (OCR). Conversely, Core Central Region (CCR) resale prices rose 2.5 per cent after two consecutive monthly drops in July and August.
This could have been due to the cautious sentiment among HDB upgraders, who typically rely on the value of their resale flat to fund the purchase of a private property, said Christine Li, head of research and consultancy at OrangeTee.
Given that the resale market generally caters to owner-occupiers, this could explain the price decline in RCR and OCR, but not CCR.
Going forward, market watchers reckon that transaction prices will be lower.
"We expect private home transactions to be supported by genuine demand, but buyers will become more selective," said Ms Li. "Gone are the days when sellers can ask for astronomical prices and expect cash-rich buyers to knock on their doors."
ERA's Mr Lim agreed, saying that he expected more transactions to take place in the lower $800,000 to $1.4 million range as permanent residents who are unable to purchase resale HDB flats are forced to look at the private residential resale market.
Rental for non-landed private homes slipped 1.1 per cent last month, registering the biggest monthly rental price decline since the beginning of this year.
Rents in all three regions trended downwards - rents in the CCR dropped 1.9 per cent followed by a 0.7 per cent drop in the RCR and 0.5 per cent drop in the OCR.
"With more projects obtaining their Temporary Occupation Permits (TOP), together with the cutting of foreign manpower hiring, the rental market is under pressure. This is especially so for older apartments and condominiums," noted ERA's Mr Lim.
On average, gross rental yield for non-landed homes ranged between 3.1 per cent and 3.9 per cent in Q3 this year, down from the yield band of 3.3 per cent to 4.2 per cent in the same quarter last year.
Published October 11, 2013
COV for HDB resale flats hits four-year low
But overall prices up 0.2% in Sept, Real Estate Exchange flash figures show
By Mindy Tan [email protected]
CASH-OVER-VALUATION (COV) for resale flats extended their decline last month, shedding another $3,000 to hit $15,000 - the lowest level since July 2009, according to flash estimates released by the Singapore Real Estate Exchange yesterday.
Despite this, overall resale public-housing prices inched up 0.2 per cent last month, reversing four consecutive declines in the preceding months.
ERA's key executive officer Eugene Lim said that he expected COVs to continue moderating in coming months given the impact of the cooling measures and the increase in new flat supply.
"We are likely to see a median of around $10,000 by year-end," said Mr Lim. "With lower COVs, lower resale transaction prices are expected . . . We can expect prices to continue moderating in the fourth quarter and quite possibly the first quarter of next year when transactions are traditionally slower due to the festive period," he added.
While sellers of three-room and four-room flats with less attractive attributes are generally more accommodating because they are worried that if they do not lock in their buyers now, COVs will dip some more, prices of flats in mature estates with good attributes are still holding their own because of scarcity and high demand.
Notably, demand for smaller and average size flats generally held firm or even improved slightly while interest in five-room and executive flats was muted as the new mortgage servicing ratio (MSR) cap meant that fewer buyers can secure large loans, said Ong Kah Seng, director at R'ST Research.
"For the remainder of the year, COVs and prices will continue to moderate marginally and COV has the potential to reach an average of about $12,000 by year-end," predicted Mr Ong.
Resale transaction prices are expected to see dips of up to 2 per cent in Q4, he added.
However, transaction volumes are expected to be below 20,000 in 2013, the lowest in the history of the HDB resale market, said Mr Lim.
This stems from the lowering of the MSR cap to 30 per cent, and changes in government policies, such as allowing singles to buy Build-To-Order flats and requiring permanent residents to wait for three years before purchasing a resale flat. In addition, the Housing and Development Board (HDB) has been actively rolling out new flats to meet pent-up demand.
Already, transaction volumes have fallen. Last month, an estimated 1,164 resale flats were bought, compared with 1,193 flats the month before. Between July and September this year, an estimated 3,661 resale flats changed hands, down 33 per cent from a year earlier.
The same drop in year-on-year transactions was seen in the private resale arena, where some 1,478 units were picked up between July and September this year, a drop of 57 per cent compared with last year. About 462 non-landed homes changed hands last month, compared with 447 in August.
Meanwhile, resale prices of non-landed homes slipped 1.6 per cent last month, led by a 3.5 per cent drop in the Rest of Central Region (RCR) and followed by a 1.5 per cent drop in the Outside Central Region (OCR). Conversely, Core Central Region (CCR) resale prices rose 2.5 per cent after two consecutive monthly drops in July and August.
This could have been due to the cautious sentiment among HDB upgraders, who typically rely on the value of their resale flat to fund the purchase of a private property, said Christine Li, head of research and consultancy at OrangeTee.
Given that the resale market generally caters to owner-occupiers, this could explain the price decline in RCR and OCR, but not CCR.
Going forward, market watchers reckon that transaction prices will be lower.
"We expect private home transactions to be supported by genuine demand, but buyers will become more selective," said Ms Li. "Gone are the days when sellers can ask for astronomical prices and expect cash-rich buyers to knock on their doors."
ERA's Mr Lim agreed, saying that he expected more transactions to take place in the lower $800,000 to $1.4 million range as permanent residents who are unable to purchase resale HDB flats are forced to look at the private residential resale market.
Rental for non-landed private homes slipped 1.1 per cent last month, registering the biggest monthly rental price decline since the beginning of this year.
Rents in all three regions trended downwards - rents in the CCR dropped 1.9 per cent followed by a 0.7 per cent drop in the RCR and 0.5 per cent drop in the OCR.
"With more projects obtaining their Temporary Occupation Permits (TOP), together with the cutting of foreign manpower hiring, the rental market is under pressure. This is especially so for older apartments and condominiums," noted ERA's Mr Lim.
On average, gross rental yield for non-landed homes ranged between 3.1 per cent and 3.9 per cent in Q3 this year, down from the yield band of 3.3 per cent to 4.2 per cent in the same quarter last year.