COVs at lowest level in more than two years
SINGAPORE — Cash-over-valuation (COV) premiums for Housing and Development Board (HDB) resale flats have fallen to the lowest level in more than two years as the latest property cooling measures continued to work their way through the market.
The median overall COV fell to S$24,000 in June, down S$3,000 or 11.1 per cent from the previous month, according to the Residential Property Flash Report released yesterday by the Singapore Real Estate Exchange (SRX), which compiles data from 11 agencies. It was the lowest monthly figure since February 2011, when it stood at S$22,000.
Overall HDB resale prices fell marginally for a second consecutive month in June, slipping by 0.1 per cent to a median S$450,000 for the whole of Singapore.
Analysts said the declines showed that the January curbs — which include higher additional buyer’s stamp duties, lower loan-to-value ratios, higher down payments, as well as caps on mortgage servicing ratios — had been effective at containing prices.
“It’s a combined effect of the cooling measures introduced in January … and the steady, strong supply of Build-To-Order (BTO) flats,” said Mr Nicholas Mak, Executive Director for Research and Consultancy at property firm SLP International.
In line with the downtrend, resale HDB transactions fell 23 per cent from May to 1,017 units in June, according to the flash data. The SRX estimated that the total volume for June will reach 1,210 units, still lower than the previous month and June last year.
“The Government has announced that they are releasing 25,000 BTO flats (this year). That has a calming effect because people don’t have to rush into buying. I think there is still room for COVs to drop further because these factors are staying for the rest of the year, or even next year,” added Mr Mak.
Mr Ku Swee Yong, Chief Executive of International Property Advisor, noted that HDB resale volume this year had fallen rather significantly from last year. The total volume for the first half is estimated at 7,555 units, down from the 10,101 units recorded in the previous six-month period, according to the SRX.
“Some people may have held back selling. And with the new borrowing rules, people may hold back because they may not be able to finance their next home purchase,” said Mr Ku.
In the private residential market, the resale volume of non-landed homes also continued its downward spiral to 508 units last month, or 33.3 per cent lower than in May. The estimate for the full month is 605 units, according to SRX, which would be the lowest since February.