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17-01-14, 18:32
http://www.straitstimes.com/archive/saturday/premium/singapore/story/%E2%80%98lower-covs-won%E2%80%99t-attract-buyers-yet%E2%80%99-20140111
‘Lower COVs won’t attract buyers yet’
Buyers waiting for resale flat prices to fall further: Experts
Published on Jan 11, 2014
By Janice Heng And Lee Jian Xuan
FALLING cash premiums for Housing Board flats may tempt some house hunters back to the resale market – but not immediately, experts say.
The effect is more likely to be felt later, after prices themselves have fallen further.
“The negative COVs (cash over valuation) will contribute towards lower and lower valuation in the next few months,” said Century21 chief executive officer Ku Swee Yong. “Buyers are likely to hold off and wait.”
R’ST Research director Ong Kah Seng thinks resale demand will pick up once the median COV hits zero, possibly by the end of this quarter.
Median COV fell to $5,000 last month, according to flash estimates released on Thursday by the Singapore Real Estate Exchange. This was down from the peak of $35,000 in January last year.
The dramatic fall was one factor that pushed freelance writer and journalist Nicholas Yong, 34, to get a resale flat in Clementi last month with his fiancee.
Earlier last year, flats in the area still commanded COVs of $30,000 or $40,000.
“We thought it was too pricey,” said Mr Yong. The couple instead applied for a buildto- order (BTO) flat and then for a balance flat in a separate exercise. They were unsuccessful both times.
Meanwhile, the resale picture was changing, with buyers asking for increasingly lower COVs. The couple eventually snagged a four-room resale flat for $15,000 below valuation.
However, few buyers are likely to switch from BTOs to the resale market, said Mr Ku, adding that with BTO flats about 50 per cent cheaper, they still provide “a very attractive alternative”.
Resale flats in sought-after locations still command high premiums. In Bishan and Bukit Merah, for instance, median COVs were still $25,000 and $20,000 respectively in December.
Buying decisions are also influenced by other factors. More flats in Sengkang and Punggol are now being sold for prices below valuation. But this alone is not enough to tempt Ms Jess Lim into getting a resale flat there.
The 27-year-old branding executive said: “Those are two areas I won’t want to live in even if the price for resale is low or below valuation. The location is too far and it’s not convenient.”
She is looking for a resale flat in Chinatown instead.
While buyers consider their options, sellers are looking to shift their properties before prices fall further.
“To be honest, I’m not even expecting any COV,” said property agent Patrick Tan, 38, who is selling his own flat and is resigned to earning less from the sale than he could have done earlier.
Sellers should not wait and hope for an upturn, experts say.
If a property stays on the market, it may eventually sell for less, noted ERA Realty key executive officer Eugene Lim.
[email protected]
[email protected]
‘Lower COVs won’t attract buyers yet’
Buyers waiting for resale flat prices to fall further: Experts
Published on Jan 11, 2014
By Janice Heng And Lee Jian Xuan
FALLING cash premiums for Housing Board flats may tempt some house hunters back to the resale market – but not immediately, experts say.
The effect is more likely to be felt later, after prices themselves have fallen further.
“The negative COVs (cash over valuation) will contribute towards lower and lower valuation in the next few months,” said Century21 chief executive officer Ku Swee Yong. “Buyers are likely to hold off and wait.”
R’ST Research director Ong Kah Seng thinks resale demand will pick up once the median COV hits zero, possibly by the end of this quarter.
Median COV fell to $5,000 last month, according to flash estimates released on Thursday by the Singapore Real Estate Exchange. This was down from the peak of $35,000 in January last year.
The dramatic fall was one factor that pushed freelance writer and journalist Nicholas Yong, 34, to get a resale flat in Clementi last month with his fiancee.
Earlier last year, flats in the area still commanded COVs of $30,000 or $40,000.
“We thought it was too pricey,” said Mr Yong. The couple instead applied for a buildto- order (BTO) flat and then for a balance flat in a separate exercise. They were unsuccessful both times.
Meanwhile, the resale picture was changing, with buyers asking for increasingly lower COVs. The couple eventually snagged a four-room resale flat for $15,000 below valuation.
However, few buyers are likely to switch from BTOs to the resale market, said Mr Ku, adding that with BTO flats about 50 per cent cheaper, they still provide “a very attractive alternative”.
Resale flats in sought-after locations still command high premiums. In Bishan and Bukit Merah, for instance, median COVs were still $25,000 and $20,000 respectively in December.
Buying decisions are also influenced by other factors. More flats in Sengkang and Punggol are now being sold for prices below valuation. But this alone is not enough to tempt Ms Jess Lim into getting a resale flat there.
The 27-year-old branding executive said: “Those are two areas I won’t want to live in even if the price for resale is low or below valuation. The location is too far and it’s not convenient.”
She is looking for a resale flat in Chinatown instead.
While buyers consider their options, sellers are looking to shift their properties before prices fall further.
“To be honest, I’m not even expecting any COV,” said property agent Patrick Tan, 38, who is selling his own flat and is resigned to earning less from the sale than he could have done earlier.
Sellers should not wait and hope for an upturn, experts say.
If a property stays on the market, it may eventually sell for less, noted ERA Realty key executive officer Eugene Lim.
[email protected]
[email protected]