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Published September 10, 2010

HDB sellers bring down cash premium tags

By EMILYN YAP


SOME resale flat sellers asking for sky high cash premiums have been brought back down to earth by the recent property cooling measures.

Agents have seen a handful of owners lowering their cash- over-valuation (COV) quotes, especially if they had asked for more than $60,000 originally.

A few other owners have a real need to sell their flats and are demanding less to attract buyers.

C&H Realty managing director Albert Lu observed that some clients have reduced their asking COVs by up to $10,000. According to him, they tend to be serious sellers - those who have already gotten a new house and need to move.

There are also a few who live near MRT stations and were using the location as a bargaining chip for high cash premiums, somewhere between $50,000 and $60,000. Now that the market has slowed down slightly, 'they are more willing to drop the COVs,' he said.

An agent, who declined to be named, also said that about five of her clients have cut their asking COVs.

Most of the sellers were demanding unrealistically high cash premiums in the first place, she said. For instance, a client had tried to sell his flat in Clementi with a COV of $60,000 but has since lowered that to $42,000.

HSR executive director (agency) Jeffrey Hong also noticed that flat owners who were asking for 'ridiculously high' COVs have become more realistic. These flats tend to be in sought-after areas such as Marine Parade, with asking COVs of $60,000 to $80,000.

But he stressed that sellers who had quoted reasonable levels of COV in the range of $30,000 to $40,000 have held on to their demands.

COVs had been climbing steadily before the government announced the new rules. As the economy rebounded and demand for resale flats strengthened, the median COV surged to $30,000 in the second quarter of 2010, up from $3,000 in Q2 2009.

Exceptionally high COVs of $80,000 to $100,000 for a few flats in popular towns such as Bishan contributed to the rise. Reports of such deals encouraged some owners to raise asking prices for their flats further.

The new cooling measures - some of which restrict the concurrent ownership of public and private properties - have introduced some caution to the market.

Sellers have become more realistic because they know that buyers are not rushing into the market, said Dennis Wee Group director Chris Koh.

'We are educating owners: if the price offered is good, take it,' he said.

'If you call for such a high COV, nobody will even want to come and look (at your flat).'