SINGAPORE - CASH premiums for HDB resale flats have climbed to a median of $34,000 over the last two months, just $2,000 short of the record reached last year.
This has pushed the median resale flat price to $455,000 in the fourth quarter thus far, a 1.1 per cent rise from the quarter before, said the Singapore Real Estate Exchange (SRX) in its latest report.
Cash-over-valuation (COV) premiums are what buyers pay over and above the valuation of a flat. As they have to be paid in cash, COVs have an impact on the affordability of resale flats.
Since tracking began in 2007, the highest median that COVs have reached is $36,000, in the third quarter of last year.
Property agency bosses say they expect COVs to continue to rise as long as the supply of resale flats remains tight.
With prices of private property still rising, more potential buyers will also find themselves priced out and turn to the Housing Board resale market.
These buyers can put up considerable COVs, noted ECG Property managing director Shawn Tan.
"The private market must cool down before resale COVs can come down," he said.
According to SRX, which captures transactions from the HDB and major property agencies, the prices of private non-landed property grew 5.4 per cent in the last two months.
Property experts said policy measures to curb speculation have had the effect of diminishing the number of resale units put up for sale.
In 2010, for example, the minimum occupation period before a buyer could put his flat up for sale again was raised from three years to five.
This effectively shrank the resale market, and transaction volumes have dropped by about a quarter since.
In 2010, 32,000 resale flats changed hands. Last year, the figure fell to 25,000. The num-ber for this year is expected to come in about the same or lower.
C&H Properties key executive officer Albert Lu also pointed to the policy of allowing HDB upgraders to buy private property and still hold on to their flats. "This system is not healthy, in my view," he said. "If you can buy private property, you should let go of your HDB flat back into the resale market."
What also fanned the COV flames, said observers, were recent headline-making transactions where sellers pocketed cash premiums of about $200,000.
In September, a Queenstown flat went for the price of $1 million, which included $195,000 in COV. Around the same time, an executive flat in Bishan that went for $970,000 set a new COV record of $250,000.
"Sellers see these record prices being achieved, and they think they don't need to negotiate," summed up Mr Lee Sze Teck, DWG's senior manager of training, research and consultancy.
Flat buyers expressed resignation at the fact that high COVs are here to stay.
Mr Ong Jun Xing, 29, waited a year before buying a resale flat as he was hoping COVs would fall. But he finally bought a flat in Queenstown a few weeks ago, for which he paid $60,000 in COV.
"I couldn't wait any more and I wanted that location, so I had to pay the premium."
Mr Rudi Lim, 34, wants to move his growing family to an executive flat in Jurong to be near his parents.
He can get a good amount in COV from selling his four-room flat in Sengkang, but expects to have to pay an even higher COV - about $100,000 - for his new flat.
"If I were buying a house for the first time, I would be cursing," said the Web design company director. "I'm not happy about the COV I have to pay, but I'm better off than a first-timer."