Figures show 7 in 10 paid less than $30,000 in past six months
THE Housing Board (HDB) has released fresh figures that show the bulk of resale flat sales - about seven in 10 - in the past six months were done with less than $30,000 cash upfront needed.
More than half, or 54 per cent, of home buyers paid less than $25,000 cash upfront for their resale homes.
And about 40 per cent of flats sold in the September to March period were transacted with cash-over-valuations (COV) of below $20,000.
COV refers to the cash paid upfront by buyers above the valuation of a flat.
This figure - regarded as an indicator of the level of demand in the resale market by analysts - stabilised at a median of $25,000 for the first quarter ended March 31, up just $1,000 from the median of $24,000 in the previous quarter.
The HDB said it released detailed figures of COV levels for the first time because several media stories recently on 'extremely high COVs in areas like Bishan and Queenstown...do not provide a balanced picture'.
'Even in a market with rising COVs, there is always the flip side of transactions with lower COVs,' said the HDB in an e-mail to The Straits Times.
The HDB's figures showed that about 15 per cent of home buyers in the past six months bought their resale homes with $10,000 or less cash upfront needed.
Housing analysts said yesterday the new information will help home buyers and will also allay concerns about runaway COV prices highlighted in some recent media reports.
Chesterton Suntec International research and consultancy director Colin Tan said: 'The reality is different from the perception, so such figures help home buyers gauge the true picture on the ground.
'But at the $25,000 level, it may still be a high amount for some households,' he said. 'The good news is, as more new flats hit the market, demand will shift from the resale market and COV prices will eventually come down.'
On a different note, Ngee Ann Polytechnic real estate lecturer Nicholas Mak observed that the percentage of home buyers paying more than $30,000 rose from 26 per cent in the fourth quarter to 30 per cent in the first quarter.
'This shows there is still demand pressure and people are paying more,' he said. But there are signs that the HDB resale market is stabilising, he added.
HDB resale flat prices rose 3.9 per cent in the fourth quarter of last year, and rose at a slower rate of 2.8 per cent in the three months ended March 31.
'In a stabilising market - where prices continue to slow down - valuation of flats will catch up and COVs will get smaller,' said Mr Mak.
Valuation of flats is based on flat attributes and historical transactions.
PropNex chief executive Mohamed Ismail said agents are seeing resistance from buyers in paying high COVs since prices of HDB resale flats are already at their peak.
He expects COVs to correct to about a median of $20,000 by the end of the third quarter as the HDB's recent policy changes - such as raising the minimum time required for a seller to sell a home - take effect.
ECG Property Group chief executive Eric Cheng agreed, adding that owners asking for higher COVs had to be realistic, given new HDB housing developments coming up and restrictions placed on permanent resident home buyers.
One such home buyer refusing to pay high prices is Ms Pamela Yap, 25, who recently bought a three-room flat at Everton Park with her self-employed husband, 28, for $322,000 - $10,000 below valuation.
Ms Yap, who intends to spend $20,000 on renovations on her eighth-floor flat, said she was happy with the price, adding that it was the result of 'months of hunting for a good bargain'.
'We viewed many units before this and many of them asked for high COVs. We did not want to pay so much so we kept looking until we found one,' she said.
Source: Straits Times, 7 May 2010