Feb 13, 2014
The days of COV
(cash-over-valuation) are already coming to an end as incidents of CUV –
cash-under-valuation transactions – become more common in all sectors of
Singapore’s property resale market.
Examples of
property buyers having to pay as much as S$100,000 above valuation were fairly
common until recently. Now the balance is shifting and there are increasing
numbers of transactions involving sellers accepting offers below, and in some
cases significantly below, the valuation price of their property.
One Singapore real
estate agent cited recent examples where sellers were willing to accept offers
significantly less than the valuation price. One private property, valued at
S$1.42 million, is likely to be transacted at S$1.25 million, the agent told
Property guru on condition of anonymity.
Evan Chung, Vice
President of the Resale Division of real estate agency DTZ, said: “CUV
transactions have already been transacted and are on the increase.”
Citing recent HDB
data, Chung said that 28.5 percent of HDB resale deals during January 2014 were
closed below valuation.
“Areas such as
Sengkang and Jurong West are now seeing about half their transactions clocking
in negative COVs, and I believe the percentage of CUV transactions will
continue to rise over the year and likewise, we'll see HDB valuations come down
accordingly.”
Public data analyzed by PropertyGuru this morning focusing solely on Jurong West showed average per sq ft prices for resale HDB properties in January 2014 stood at S$406. This was unchanged from the previous month but down from the S$426 per sqft one year earlier – a decline of 4.47 percent year-on-year.
Chung said that
units in mature estates, and in good locations near MRT stations or a shopping
mall, will still continue to see demand and command a certain COV.
“This is especially
for units that are nicely renovated,” he added.
“For home buyers, the current trend is highly welcomed and I can say the cooling measures and increase in BTO supply have achieved their desired effect.
“However, I believe
the authorities will be wise enough to ease off some of the measures in the
near future, otherwise the displeasure that buyers have faced over the last few
years will eventually be transferred to home owners when they see their
property value erode too fast and by too much,” he concluded.
The flip side, of course, is that there are potential bargains on offer for serious buyers with finances in place.
Lucas Tan recently
purchased a four-room HDB resale property in Tampines.
He said: “There
were four almost identical properties on the market, but three of the four
sellers were unwilling to negotiate. They were still living in last year in
terms of prices.
“I eventually did a
deal with the only seller who was being realistic and was willing to
negotiate.”
Tan confirmed he paid under the valuation price for his property.
Andrew also
contacted PropertyGuru to explain his situation.
He said: “I sold my
19-year-old 151 sqm freehold apartment in District 15 in November for S$1.43
million - about S$885 per sq ft. I was hoping for S$1,000 per sq ft but with
more than 20 viewings in five weeks it was finally sold to a neighbor.”
He added: “To me
this was a little low considering the newer though smaller-sized units were
going at S$1,300 for resale. However I
decided to sell as I had lost my job, and I expect prices to drift lower by
about 20 percent in the next few years, and will not recover unless the
controls are significantly eased.”
Info
courtesy - PropertyGuru
