Sunday, April 29, 2012

Cash premiums for HDB resale flats fall about 30%

Straits Times: Sat, Apr 28
THE cash premiums payable to buy resale HDB flats fell significantly in less popular estates like Pasir Ris and Woodlands last quarter, making them more affordable now to buyers.

Known as 'cash over valuation (COV)', the premiums also fell in mature estates like Hougang, Bedok and Clementi, due to the injection of new flats in these areas over the last few months by the Government, said analysts.

The falls in COV come as prices of HDB resale flats inched up 0.6 per cent in the first quarter of the year, the slowest pace of increase since 2009.

While HDB resale prices are still at an all-time high, the latest rise is less than half the 1.7 per cent clocked in the quarter before.

A total of 5,892 resale flats changed hands in the first three months of the year, down 0.5 per cent from 5,921 in the quarter before.

Most of these flats attracted COV, which is the amount a buyer pays over and above the valuation of an HDB resale flat. As it must be paid in cash, it has a significant impact on affordability.

While HDB has stopped providing a nationwide median of COVs, data collated from real estate agencies showed that overall, cash premiums fell about 30 per cent in the first quarter of this year, compared with 10 per cent the quarter before.

This is partly because a bumper crop of new flats has taken buyers away from the resale market, said observers. About 8,000 units have been offered since the year began, with 5,000 more scheduled next month.

A move last month to reserve a higher percentage of new executive condominium units for second-timers also changed buyer behaviour...
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Martin Koh/ Sherry Tang
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