Resale flats' median COV at 4-year low

SINGAPORE - The HDB resale market cooled further last month as cash premiums payable by buyers fell to a four-year low. Prices have seen the longest downward slide in seven years, amid low transaction volumes that showed no signs of revival.

Overall median cash premiums for resale flats dropped $2,000 to $18,000 last month. This was the lowest since July 2009, when the median cash-over-valuation (COV) was $10,000, according to Singapore Real Estate Exchange estimates released on Friday.

Median premiums have halved since they peaked at $35,000 in January. Resale prices also slipped 0.7 per cent last month, a fourth consecutive monthly drop. This is the first time since January 2006 that prices have fallen for four straight months.

These are all fallouts of the January curbs on the proportion of income buyers can use to repay their mortgage, said analysts.

"That started the ball rolling," said Mr Chris Koh, director of property firm Chris International.

Singles became eligible to buy new HDB flats too, drawing some away from resale ones.

Bigger homes in less central towns fetched lower COVs. Sellers are worried that the COV will continue to dip "if they do not lock in their buyers now", said ERA key executive officer Eugene Lim. Punggol's executive flats, of which three were sold last month, went for a median $13,000 below valuation, the lowest by region.

But executive flats in popular estates like Bishan and Queenstown still commanded high premiums. The highest COV was for Bishan flats, which fetched a median premium of $120,000.

However, resale transactions stayed low. A total of 1,280 flats were sold last month, similar to July's 1,286, but a 29 per cent drop from last year.

Prices of private non-landed resale homes inched up 1.5 per cent last month after a 0.5 per cent drop the month before.

National Development Minister Khaw Boon Wan said on Friday on his blog that HDB completed 9,000 new flats this year, and is on track to deliver this year's promised 13,600 units. The 2014 target is 28,000.

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