Jul 25, 2011

Prices of the Housing and Development Board’s (HDB) resale flats rose 3.1 percent to 180.3 in Q2, from a comparably low 1.6 percent increase in the previous quarter.

This increase was tied to a six percent growth in the resale transaction volume in 6,581 cases.

PropNex data revealed that the median cash-over-valuation (COV) rose to S$32,000 in Q2 2011, from S$22,000 in Q1 2011.

“Those who took Q1 2011 to understand the cooling measures have come back to buy on the resale market,” said Mohamed Ismail, PropNex CEO.

“However, there are still many owners who, due to the effects of the cooling measures — especially the lower 60 percent Loan-To-Value ratio and revised Minimum Occupation Periods, are reluctant to move or sell their flat, resulting in a supply crunch and driving median resale prices as well as COV levels up.”

PropNex data indicated that COV levels have increased.

“Also noteworthy is that, for the months of April, May and June — which constitutes Q2 2011 — PropNex data showed a one percent, four percent and 10 percent increase respectively in the number of HDB resale flats being transacted at COVs of S$50,000 and above.”

“Home sellers must remain realistic about their COV demands because if not, there will be resistance from the buyers.”

Ismail added that in the latest Build-to-Order (BTO) project, in which 3,556 flats were launched, the rate of over-subscription ranged from three to four times, showing a continued robust demand for public housing.

He expects transaction volumes to surpass 13,000 for H2 2011, tied to resale price index growth of approximately five to six percent for the next two quarters.

Meanwhile, HDB said it has “offered about 15,500 new flats under the Build-To-Order (BTO) system so far, and is on track to deliver 25,000 BTO flats for the whole of 2011.”

“The remaining 9,500 new flats will be released over two BTO launches before year end. In addition, HDB is preparing a Sale of Balance Flats Exercise to widen the choices for flat buyers.”

Info courtesy-