COV for resale flats tumbles, prices dip
CASH premiums for Housing Board resale flats fell $8,000 last month, in tandem with a fall in their prices.
The Singapore Real Estate Exchange said that the median cash-over-valuation (COV) dropped below $10,000 for the first time since July 2009.
More HDB resale deals also closed below valuation last month, compared to October.
Overall, HDB resale prices fell slightly, by 0.6 per cent, reaching the lowest level since September last year.
Some 1,051 resale flats were sold last month - a 34 per cent drop from the same period last year.
PropNex Realty chief executive Mohamed Ismail said that, when markets weaken, COVs are usually the first to drop. "The reduction of the mortgage-servicing ratio to 30 per cent of a borrower's gross monthly income has taken its full effect on resale prices," he added.
He expects volumes to drop as it is now harder to get home loans.
Property experts also predicted that falling COVs may attract some homebuyers to the HDB resale market.
"They will find it more affordable and they need not endure the long wait for Build-To-Order units," said Mr Eugene Lim, ERA's key executive officer.
He also predicted that resale prices are likely to fall about 5 per cent next year.