1 in 10 HDB resale flats sold with zero COV

One in 10 Housing Board resale flats sold with zero cash- over-valuation (COV) last month, the highest proportion of such deals since June 2009.

According to the Singapore Real Estate Exchange (SRX), 83 flats sold with no premiums, or cash incentives, to entice the seller.

Property analysts point to several factors for this.

One is that valuations for flats seem to have hit a plateau, with the HDB's resale price index dipping by 0.7 per cent in the third quarter after a bull run that began in the second quarter in 2009.

As a result, sellers might have been eager to sell their flats at valuation prices to secure their capital gains, they say.

At the same time, buyers are also cautious amid a weak market that is expected to see the lowest number of resale transactions since 1997.

Fuelling this caution is a slew of new rules this year - such as tighter loan restrictions and a three-year wait for permanent residents to buy resale flats - which have reduced demand significantly.

Larger flats have taken a hit as a result of buyers now having to take smaller loans, according to SRX.

About 13 per cent of all five-room flats transacted last month sold with zero COV, compared with 1.7 per cent in January this year.

In terms of locations, zero-COV transactions occurred mostly in areas like Jurong West, Punggol and Sembawang.

PropNex chief executive Mohamed Ismail noted that one out of every two flats in Punggol was sold at valuation price.

"There is an oversupply of flats in that area as many hit the minimum occupancy period at the same time. For the other areas, it is simply that they are in outlying areas with fewer amenities," he said.

He expects the number of flats trading at zero COV to hit 20 per cent by year end due to a strong oversupply of resale units and weak demand.

But ERA Realty key executive officer Eugene Lim noted that flats in good locations and close to amenities can still command sizeable premiums.


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