Flat buyers raise hopes as COV hits 4-year low
OVERALL Housing Board (HDB) resale cash premiums tumbled to a new low of $5,000 last month, according to flash estimates released by the Singapore Real Estate Exchange (SRX) yesterday.
It was the lowest cash-over-valuation (COV) since June 2009, when it dropped to $3,000 during the global financial crisis.
Over the course of last year, the median COV for resale homes has dropped by more than 85 per cent from its peak of $35,000 last January.
A rising number of sellers are selling below valuation, too. SRX records show that a fifth of HDB resale deals last month closed below valuation, the highest ratio seen since the financial crisis, which saw a quarter of deals closed below valuation in May 2009.
The chief executive of PropNex Realty, Mr Mohamed Ismail, said that cash premiums could slip further in the next few months, on the back of an increasing number of negative COV transactions.
He expects more deals to be done at valuation or lower, but added: "Flats in mature estates or with good locality attributes will still be fetching reasonable premiums."
Mr Eugene Lim, key executive of ERA Realty, said that resale-transaction volume is expected to be eight to 10 per cent better than that last year, which saw a historical low of less than 20,000.
He said: "As resale prices and COV continue to decline, and with the Government decreasing the supply of new three-room and larger flats, we may see more buyers back in the resale market over the course of this year."
For writer Gregory Leow, 39, who has been looking for a flat for a year, the lower COV for resale flats is good news.
"My wife and I didn't even consider buying a resale flat previously, because the COV was just too high. But things have moved a step in the right direction for us now," he said.