Friday, April 27, 2012

HDB Cash Over Valuation prices down in Q1 2012

Good news potential resale HDB flat buyers are waiting for is coming: Cash Over Valuation (COV) has dived 17-18 % across all categories of resale HDB flats. The largest drop was registered by three-room flats. There the COV dropped some 18 per cent:

"For example, the median COV for a three-room flat in Toa Payoh was S$22,000 in the first quarter of this year, down from S$30,000 in the previous quarter. Property watchers say the ramp up in supply of Build-To-Order (BTO) flats, have given home buyers more options. 
Lee Sze Teck, senior research manager at DWG, said: "Lower-income families have another option of buying a BTO so they do not actually need to go into the resale market. They have a bit more bargaining power, if they choose to buy in the resale market, or choose to buy in the BTO market."
Source :  HDB resale prices up 0.6% in Q1
 Cash-over-valuation (COV) is the cash amount paid upfront by a buyer over a flat’s valuation by the Housing Board[1]. This portion is not covered by bank loan and needs to be paid by cash so greatly effects the affordability of resale HDB flats. Recently, due to a great supply crunch of resale HDB flats, the COV values came up to the roof.

Although HDB also has a primary market where couples can buy directly from HDB with subsidized prices, there is an earning ceiling to do so. So if a couple is making more than 12,000 SGD per month combined, they need to buy from resale market or a very very expensive private property.

[1] - COV

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