Tuesday, January 15, 2013

Record COV for Resale HDB to Come in Early 2013

In the fourth quarter of 2012, the resale price index for Housing and Development Board (HDB) flats broke yet another record, seeing a rise of 2.5% over the third quarter. This marks the largest growth for 2012. It also beat the last record set in 2011’s third quarter, when the increase was 3.8%.

The total growth, however, has seen a steady decline, from recording double digits of 14.1% in 2010 and 10.7% in 2011 to just 6.6% last year. Industry insiders attribute the drop, which started in 2010, to a short supply of resale flats. This is probably directly related to the increase in the Minimum Occupation Period (MOP) to 5 years, which was also implemented in 2010.

Concurrently, the number of new Build-to-Order (BTO) flats and Executive Condominiums (ECs) allocated to second-timers was increased in March 2012, further restricting the number of resale flats being offered.

Although the price index is no longer growing at a double digit percentage rate, resale flat prices are far from stabilised. Because supply is more highly restricted now, demand will continue to outweigh supply, further pushing prices up.

 The median Cash-Over-Valuation (COV) price is also steadily increasing, with the fourth quarter recording a 17% increase over the third quarter, from $31,000 to $36,000. Experts believe that if the current trend continues, a record-breaking COV will occur early this year. The highest COV collected to date is $38,000 from the third quarter of 2011.

HDB has announced its plans to launch at least 23,000 BTO flats this year. Industry insiders believe this is likely to help stabliise resale prices slightly, and limit it to an increase within 5%. The 23,000 units, revised upwards from HDB’s initial planned launch of 20,000 units this year, may be to cater to policy changes in 2013.

Experts speculate that these policy changes may impact families with young kids, first-timers or even singles.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
Email: marshe_inc@yahoo.com.sg
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)

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