8/8/2019 Prices of HDB resale flats still going up
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www.straitstimes.com Published on Jan 1, 2011The Straits
Times
Prices of HDB resale flats still going upOverall median prices
climbing despite drop in COV premiums By Jessica Cheam
PRICES of public housing resale flats are still going up despite
the falling cash premiums demanded by sellers.
Fresh data obtained by The Straits Times from three major
property agencies showed overall median pricesclimbing across
almost all flat types in November, compared to HDB's latest third
quarter statistics.
This is despite measures introduced by the Government on Aug 30
to cool Singapore's red-hot public housingmarket, which tightened
financing and restricted home ownership.
When contacted, the Housing Board (HDB) said that it was unable
to comment further on the resale pricesahead of the release of the
flash estimates on Jan 3.
'However, we do see falling COV, resale volume, and a gradual
slowing down of price growth,' it said.
It added: 'We are unable to speculate how HDB resale flat prices
will move in the next quarter as other thandemand and supply, they
are also affected by various factors such as economic conditions
and marketsentiments.'
It explained that prices of resale flats depend on 'the
prevailing market conditions, supply and demand, andthe individual
needs of the buyers and sellers'.
'Valuers (of resale flats) use the comparison method which
typically uses past recent transactions whichprovides the best
evidence of market values. Hence, valuation inevitably lags behind
the prevailing market,' itsaid.
Analysts explained that final resale prices are largely
determined by valuations of HDB resale flats, which arestill
climbing. These valuations are based on past transactions for which
caveats have been lodged. They lagbehind current prices because
they are deals typically struck one to two months ago.
The still-rising prices spell a further hike - and a fresh
record - in the HDB resale price index for the fourthquarter of
2010.
This is despite cash over valuation (COV) premiums falling since
the announcement of the Aug 30 measures.
COV refers to the amount a buyer pays over and above the
valuation of an HDB resale flat, and is payableonly in cash.
National Development Minister Mah Bow Tan had previously
revealed that median COV figures had dropped
from $30,000 in the third quarter to about $22,000 in
November.While HDB figures showed the median resale price for
four-roomers for the three months ending in September at $378,000,
median prices at the agencies ranged from $383,000 to $400,800 in
November.
For executive flats, median prices for November were in the
range of $550,000 to $563,000 - up from HDB'sfigure of $530,000 in
the third quarter.
An example of rising prices but falling COVs can be seen in the
sale of a low-floor four-room flat in TampinesWest in December for
$380,000, including $8,000 COV. A similar flat in the same area
sold for $340,000 inSeptember, including $20,000 COV.
The three agencies The Straits Times polled - HSR Property
Group, PropNex, and Dennis Wee Group (DWG)
8/8/2019 Prices of HDB resale flats still going up
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- make up more than half the HDB resale market share.
Mr Colin Tan, research and consultancy director of Chesterton
Suntec International, is not surprised by theclimbing prices. 'The
question is how fast it is going up,' he said. If the estimates
show the price increase for the fourth quarter to be less than 2.5
per cent, that means it is stabilising, he added.
On what this means for the hot button issue of affordability of
housing, Mr Tan noted that the biggest concernfor many first-time
home buyers would be the level of COV, as this can only be paid in
cash.
The absolute amount of a flat's price may be higher, but if COV
falls, it could be more 'affordable' for suchbuyers in that sense,
he said.
However, higher flat prices and lower COVs will logically mean
buyers will be saddled with bigger loans.
Analysts also point to another issue propping up resale flat
prices - there are not as many flats on the market.
PropNex chief executive Mohamed Ismail said many sellers have
decided to take their units off given thesoftening market.
The pool of buyers has also shrunk after the cooling measures
made it more difficult for permanent residents(PRs) and private
property owners to buy HDB resale flats.
He added that, based on December's sales for the firm, prices
seemed to be stabilising with only marginalincreases.
Analysts are now saying that the resale price index will more
likely stabilise and move less than 1 or 2 per centupwards or
downwards in the coming quarters.
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