Cash premiums for HDB resale flats fall about 30%

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.

COV 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.

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.

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.

COVs have fallen to a median of $20,000 for three-, four- and five-room flats in Woodlands.

And the biggest fall in COVs was for executive flats in Pasir Ris. In the first quarter, the median COV for such a flat was $35,000, down by almost half from the $58,000 it reached in the quarter before.

COVs held up relatively well, however, in popular estates like Queenstown, Bukit Merah and Toa Payoh.

Singapore's small size means that cash premiums across the island will eventually fall or rise in a largely uniform fashion, said agents and analysts. They expect COVs to continue to fall gradually through the next two quarters.

COVs are likely to stabilise soon because buyers who were unwilling or unable to pay high cash premiums will eventually return to the resale market, said ERA Realty key executive officer Eugene Lim.

There are already signs of a pick-up in resale transactions this month, he said.

According to ERA's agents, waiting time for a first appointment with HDB after a deal is made has grown to about five weeks, up from the three weeks it averaged at the start of the year.

Source: The Straits Times – 28 April 2012