Data released on Friday by the HDB showed first-quarter median cash-over-valuation levels fell substantially to $4,000 in the first quarter, from $15,000 in the previous quarter.

This refers to the sum that flat buyers pay above a valuation set by HDB-appointed private valuers. Buyers can use Central Provident Fund money for any sum up to this level but need cash for any more.

The significant fall is attributable to twin factors - falling resale flat prices in a deteriorating economy and higher valuation levels, after a run-up in prices over the past year or so before recent falls.

HDB resale flats fell 0.8 per cent in the first quarter, just over the initial estimate of 0.6 per cent, after prices peaked late last year. However, resale prices are still at healthy levels, about 2 per cent above the 1996 peak, said Knight Frank's director of consultancy and research Nicholas Mak.

Higher HDB valuations are why resale HDB prices dipped only slightly despite a far lower cash portion, said PropNex chief executive Mohamed Ismail. 'It is evident that public housing remains resilient in this gloomy economy, thanks to continued strong demand for resale flats. The alternatives, Build-To-Order and Design, Build and Sell Scheme projects, are still years away from completion.'

But things may change. 'Generally, though valuations are still high, banks are becoming more conservative and there have been cases where buyers are offered only 70 per cent loans instead of the usual 80 per cent,' said ERA Asia Pacific's associate director, Mr Eugene Lim. That means more higher-value HDB resale flats are now being sold below valuation - in some cases, perhaps, up to $30,000 to $50,000 below, he said.

'For larger flats, the days of transactions with cash-over-valuation are over,' adds Mr Lim.

ERA's first-quarter resale HDB deals show 21 per cent of flats sold below valuation, 19 per cent at valuation. Of the rest, most fetched no more than $15,000 cash, said Mr Lim.

First-quarter median sublet rents were unchanged for the smaller flats, and down $100 to $200 for the four-room and larger flats.

Read the full story in Saturday's edition of The Straits Times.