COVS DROP IN MOST ESTATES
Cash-over-valuation (COVs) figures of resale flats dropped by over 10 percent in 20 of the 26 HDB towns surveyed, from the high levels seen in the third quarter.
Eight towns saw a decline of 20 percent or more, with Bukit Timah recording a 32 percent decline.
The figures are based on The Sunday Times’ analysis of data from PropNex, Dennis Wee Group (DWG) and ERA Asia-Pacific.
Punggol, Central and Marine Parade saw the sharpest decline at over 25 percent in cash premiums paid.
The Sunday Times’ analysis reveals the performance of the HDB resale market at certain locations three months after the government restricted ownership of HDB flats to cool resale flat prices.
Prices of HDB flats reached a historic high in Q3, prompting many home buyers, particularly first-timers, to voice concerns that resale flats are being priced beyond their reach, partly due to high COVs asked by sellers.
Based on HDB figures, estates like Bishan and Queenstown and even those in suburban areas like Punggol saw median COVs of $35,000 to $45,000 in Q3.
Since then, COVs have begun to fall, and earlier this month, National Development Minister Mah Bow Tan said that the country’s overall median COV figure hit $22,000 in November, a drop of $3,000 from October.
Declining COV numbers in those areas may imply that a price cap has been reached and home buyers are resisting to pay beyond that level, said Eugene Lim, associate director of ERA Asia-Pacific. The decline is “no surprise” due to fewer transactions in those areas, he added.