HDB resale prices, COVs dip on fewer transactions

Resale prices and cash premiums for Housing Board flats have dipped on the back of fewer transactions, according to data released by the Singapore Real Estate Exchange (SRX) yesterday.

The overall median cash-over- valuation - the cash component buyers pay to sweeten the deal - dropped to $26,000 last month, the lowest since July last year.

Property analysts attributed this downward trend to cooling measures announced at the start of the year, when the median premium was $35,000.

They also said the slew of flats launched by the HDB so far this year has soaked up some of the demand.

In a report released yesterday, SRX - which collates data from larger property firms - also noted a drop in resale prices.

Its resale index takes into account the property's age, location and proximity to amenities and MRT stations. It saw a 0.1 per cent dip to 152.2 in May.

The overall median resale price was $457,000 in May, down from $468,000 in April.

ERA Realty's key executive officer Eugene Lim said softening prices and cash premiums might attract buyers back into the resale market, particularly second-timers or those who previously received a housing subsidy.

Such buyers have a lower proportion of flats reserved for them in new HDB launches compared to first-timers and are typically older and more affluent.

"The fall in transactions is due to the measures that tightened loan eligibility and prevented some buyers from purchasing larger flats," he noted.

Mortgages from banks were limited to 30 per cent of a buyer's monthly household income in January, reducing the amount buyers can borrow by up to half.

The rules have hit the resale market hard. The HDB registered just 4,335 transactions in the first quarter of this year, a 16-year low.

SRX data showed only 2,753 flats changed hands in the first two months of the second quarter (April and May), compared to 4,058 in the same period last year.

The biggest drop was for larger flats like executive apartments (43 per cent) and five-room units (42 per cent), SRX said.

Demand has also been sapped by the release of new flats, said OrangeTee's research head Christine Li. "As a result, the resale market is effectively serving only the ineligible second-timers and permanent residents now, resulting in the weakening of price and volume," she said.

Property consultancy R'ST Research director Ong Kah Seng said premiums and resale activity are not likely to drop substantially in the future. "What we are seeing is a knee-jerk reaction to the measures," he said. "Ultimately if the supply of resale flats is limited, and the flats on offer present good value, buyers' interest will gradually recover."

darylc@sph.com.sg