Jan 17, 2012

Rising resale HDB flat prices should not be blamed on permanent residents (PRs), but on local private property owners - the buyers who pull up the stakes for the cash premium on flats, said Khaw Boon Wan, Minister for National Development.

Mr Khaw’s statement was made in response to a query raised by Zaqy Mohamad, Member of Parliament for Choa Chu Kang GRC, as to whether the Housing Board would limit the sale of resale three-room and smaller flats to just lower-income Singaporeans.

Mr Zaqy argued that PRs are generally perceived as contributing to the rising prices of resale flats and the increasing amounts of cash premiums paid to sellers, known as the cash-over-valuation (COV).

According to Daniel Tan, a real estate agent from C&H Properties, sellers of four- to five-room resale units in Woodlands, Bedok and Ang Mo Kio could command COVs of between S$50,000 and S$80,000 in August last year.

When HDB raised the income ceiling for new flats and housing subsidies, Tan noted that these sellers lowered their expectations to under S$50,000.

By the third quarter of last year, median COVs ranged from S$27,900 to S$34,000.

“The data (is) quite distinct,” noted Mr Khaw. “Typically, the PRs pay the lower COVs... among the groups, the higher COVs are often by private property owners or former private property owners... especially the enbloc owners or residents, probably with a lot of cash and still need a roof... they are the ones who bid up the COV.”

Hence, he deemed that it is unfair to blame the higher resale prices on a particular group.

Affirming that home prices have shot up within the last two to three years, Mr Khaw asked for the public’s patience, as he has been working for the market to “stabilise in due course”.

Info courtesy –