Saturday, October 6, 2012

COV prices rise after 9-month decline

04:45 AM Oct 06, 2012

SINGAPORE - The cash-over-valuation amount for resale Housing Development Board (HDB) flats rose for the first time this year in the third quarter, reversing a nine-month downward trend, despite measures by the Government to cool the market.

The overall median COV increased to S$30,000 in the third quarter from S$26,000 in the second quarter, according to the latest market update by Singapore Real Estate Report (SRX). In extreme cases, some owners of Executive flats in Queenstown had requested for COVs of more than S$150,000.

The COV is closely watched as it represents the premium cash amount paid by a buyer above the market valuation of a resale flat, and cannot be financed with a loan.

As a result of higher COV prices in the third quarter, the median resale price for flats rose by 2.3 per cent to reach S$450,000 in the quarter.

Across all HDB towns with at least 10 resale transactions in the third quarter, the highest median price is in Serangoon for Executive flats at S$690,000.

The data follows flash estimates from the HDB earlier this week, which showed that prices for previously-owned flats rose by 2 per cent in the third quarter from the previous three-month period to hit a record high.

Demand has risen as buyers come in from the sidelines, said ERA Key Executive Officer Eugene Lim.

"They have been waiting for the COV to stabilise. After three quarters of decline, they're returning to the market," he told TODAY.

Purchasing power remains strong despite a slowdown in the economy, giving room to further increase.

"Our fundamentals remain robust. We are not in recession, and the employment situation is good, so I expect prices to inch up at least over the next quarter," said Mr Lim.

Mr Donald Yeo, head of HSR Property Group's support and services, concurred that buyers have been taking a "wait-and-see" approach.

"But, with signs showing possible improvements in the Asian economy next year, buyers are realising that they'd better buy now as they head into the last quarter," he told TODAY.

Reflecting a rebounding HDB market, resale prices of private non-landed properties are similarly on the rise, recording a high of S$1,156psf in the third quarter and more than previously estimated by URA.

HDB median rents have also jumped to S$2,400 after staying flat at S$2,300 for nine months.

The Government has taken numerous steps to cool the property market, including imposing an Additional Buyer's Stamp Duty on private property and tightening rules on home loans.

In view of the overall strong housing demand and a buoyant resale market, the HDB said last month it is increasing its new Build-to-Order flat supply for this year to 27,000 units, 2,000 more than the 25,000 originally planned.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)

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