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Thread: Resale flat prices in Q2 climb 3.1%, against 1.6% in Q1

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    Default Resale flat prices in Q2 climb 3.1%, against 1.6% in Q1

    http://www.businesstimes.com.sg/sub/...51140,00.html?

    Published July 23, 2011

    Resale flat prices in Q2 climb 3.1%, against 1.6% in Q1

    HDB re-examining COV practice, says there've been calls to abolish COV and not to publish it

    By EMILYN YAP

    (Singapore)


    PRICES of resale flats in Q2 climbed 3.1 per cent quarter on quarter, at a pace that was almost twice that of Q1's 1.6 per cent, according to fresh data from the Housing & Development Board (HDB) yesterday.

    It was harder to see how the median cash-over-valuation (COV) for all resale transactions moved. While median COVs rose in several towns across all flat types, HDB broke from tradition and did not publish an overall median figure for deals closed across the island.

    In fact, HDB is re-examining the COV practice. 'There have been calls to abolish COV, as well as calls not to publish it,' an HDB spokesman said. 'MND (Ministry of National Development) and HDB are considering the pros and cons of the different options.'

    The resale flat market has been going strong on the back of robust demand and short supply, industry watchers said. There were 6,581 resale transactions in Q2, up by about 6 per cent from Q1. Q2's price growth also exceeded the official flash estimate of a 2.9 per cent increase.

    C&H Properties key executive officer Albert Lu noted that buyers who initially adopted a wait-and-see attitude after the government introduced tightening measures for the property market had returned to the scene, after they noticed that resale flat prices had not gone down. 'It's pent-up demand,' he said.

    Meanwhile, many owners have become reluctant to sell their flats, said ERA Realty Network key executive officer Eugene Lim. One reason he cited was this: Rising private property prices have led some HDB dwellers to postpone their upgrading plans.

    While the number of resale transactions did go up in Q2, it is still smaller than volumes seen in the past, at times around 8,000 transactions, he said.

    The buoyant market had industry watchers predicting a sharp rise in the median COV across all resale transactions. PropNex found from its own data that the overall median COV was $32,000 in Q2, and the firm's CEO Mohamed Ismail believes it could rise in Q3 'before plateauing in the beginning of next year'.

    HDB's median COV for all resale transactions was only $21,000 in Q1. It did not release a Q2 figure for comparison, though it continued to publish median COVs across different towns and flat types.

    Median COVs in several towns increased in Q2. For instance, at Tampines, the median COV for five-room flats was $42,000 but in Q1, it was $25,000. At Jurong West, the median COV for executive flats was $39,000, up from $20,000 in Q1.

    'The meaningful data are those by location and flat type. The overall data is dependent on the mix of flats transacted which vary from quarter to quarter, and hence not as relevant,' the HDB spokesman said.

    Views were mixed over the decision to not publish the median COV for all resale transactions. ERA's Mr Lim supported the move, saying that many buyers and sellers have been basing discussions on the COV rather than the overall price. 'This may be the first step to turning the focus of negotiations back to the resale price,' he said.

    But C&H's Mr Lu preferred to have the overall median COV figure made public, 'so that people will know what is actually going on in the market'.

    There were other pieces of information which HDB did not release in Q2, such as the proportion of resale cases transacting above valuation and the overall median resale price for each flat type.

    HDB yesterday noted an 'imbalance in supply and demand for resale flats' and said it is increasing the supply of new flats to provide eligible buyers with more options.

    It plans to launch 25,000 build-to-order flats this year and has released about 15,500 so far. The remaining 9,500 new flats will be rolled out over two launches by year-end. There will also be a sale of balance flats exercise.

    In the HDB rental market, the number of subletting transactions rose by some 13 per cent over the quarter to 7,177 in Q2.

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    http://www.straitstimes.com/PrimeNew...ry_693770.html

    Jul 23, 2011

    Resale flat market hots up again

    Prices rise 3.1% to fresh record in second quarter

    By Jessica Cheam, Housing Correspondent

    HIGHEST AND LOWEST MEDIAN COVS

    PRICES of Housing Board (HDB) resale flats are starting to sizzle again, after having grown at a slower pace in the last three quarters.

    Fresh figures from the HDB, signalling that the red-hot housing market will take some time yet to stabilise, showed resale flat prices rose 3.1 per cent to a fresh record in the second quarter.

    The rate of increase was only 1.6 per cent in the first quarter.

    The median cash premiums paid to sellers, called cash-over-valuation (COV), also reached eye-popping levels.

    In Marine Parade, for example, the median COV for five-room flats hit $95,000 in the second quarter, up from the $28,800 in the first. In Clementi, median COV for executive flats was $94,000, up from $20,000 in the first quarter.

    However, it has to be noted that these COV figures are based on fewer than 20 resale transactions over the quarter and may not be representative of the market.

    The HDB departed from its usual practice of releasing the overall median COV figure across all estates. (See other report: HDB to stop releasing overall nationwide COV figures) In the previous quarter, it was $21,000. But figures from property agencies obtained by The Straits Times do indicate a spike in median COV in the second quarter to about $32,000.

    Property agency PropNex said yesterday that its July numbers show overall median COV, based on its sales so far this month, to have reached $36,000.

    Yesterday's numbers also reverse a moderation in the rate of increase of prices seen in the last three quarters, when price growth dropped from 4 per cent in the third quarter last year to 2.5 per cent in the fourth; price growth was 1.6 per cent in the first three months of this year.

    Analysts noted that the previous estimates for the second quarter, at 2.9 per cent, indicate that resale flat prices inched up towards the end of last month. This could spell further price increases until the end of the year.

    The rise in private home prices, on the other hand, continued to moderate even as they set a record, with prices rising 2 per cent in the April-to-June quarter, slowing from 2.2 per cent in the previous three months.

    ERA Realty key executive Eugene Lim attributes the price pressure in the HDB market to the shortage of resale flats.

    'The number of resale flats put up for sale has fallen, partly because mass market condo prices have increased beyond the reach of many HDB dwellers, who had intended to upgrade. Many have postponed their upgrading plans,' he said.

    This, coupled with stringent rules introduced last August that bar concurrent ownership of HDB flats and private properties in the first five years of owning an HDB flat, have led many owners to hang on to their HDB homes - or let go only at high prices, say analysts.

    This may explain why, despite the perceived supply crunch, HDB's figures show the number of resale flats that changed hands rose by 6 per cent to 6,581 transactions in the second quarter.

    Dennis Wee Group director Chris Koh said this fierce demand was 'in line with expectations', as second and third quarters are generally stronger. 'I believe the third quarter will be even stronger than the second one because of the activities we're seeing on the ground,' he said.

    Chesterton Suntec International's head of research and consultancy Colin Tan said: 'We are undergoing a supply crunch, and if you look at the completion rate of HDB flats five years ago, it'll get worse before it gets better.'

    Although the HDB has aggressively ramped up supply in the past two years, it will be some years before each batch of these flats reaches the resale market.

    The HDB yesterday put the price movements down to an 'imbalance in supply and demand for resale flats', and said it was increasing the supply of new flats to provide more options for eligible buyers.

    It has offered about 15,000 new flats under its build-to-order or BTO system and is on track to deliver 25,000 new flats this year.

    Mr Tan added: 'The question now, is how fast HDB can pull away people from the resale option before buying the new flats. If there's a large price gap between resale and new flats, and it doesn't make sense for people to buy resale any more, then the volume of buyers will shrink.'

    [email protected]

    Additional reporting by Daryl Chin

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