SINGAPORE: Cash premiums for resale flats fell below S$10,000 in November for the first time since July 2009.
According to flash estimates compiled by the Singapore Real Estate Exchange (SRX), the cash-over-valuation (COV) for HDB resale flats reached S$8,000 in November.
Alan Cheong, research head at Savills Singapore, said: “The fall in COVs, though expected, is disconcerting. Because right now, the COV, on average, is below S$10,000. If it goes on this way, it will go into negative territory very soon.
“A falling COV like this, if wrongly interpreted in the hands of unsophisticated sellers, may trigger a panic selling situation."
Meanwhile, 13.1 per cent of HDB resale deals closed below valuation in November, up from October's 8.5 per cent. Sengkang, Choa Chu Kang, Jurong West, Woodlands and Hougang saw the most numbers of negative COV deals last month.
Overall HDB resale prices dropped 0.6 per cent in November, reaching the lowest level since September 2012.
SRX said 1,051 HDB flats were re-sold in November, down 11.5 per cent from October (1,187). Compared to a year ago, resale volumes fell 34 per cent.
Thomas Tan, executive director of RE/MAX, said: “It would be a trend going into early 2014. Traditionally, yes, this is the lull period right up to Chinese New Year.
“We can also see that the government has released lots of supply in terms of new flats in the BTO (Build-To-Order) launches and recent measures of limiting the mortgage servicing ratio to 30 per cent, that would affect affordability for many resale flat buyers.”
Over in the private condominium market, momentum also slowed, with resale volumes falling 34 per cent in November.
Resale prices of private homes declined 1.5 per cent in November, marking the third consecutive monthly drop in the overall resale price index.
SRX said this is also the lowest price level observed in this year, down 4.1 per cent from the peak in February.
Prices fell across the board for resale transactions across the island, with private homes in the city area contracting by 2.0 per cent.
Prices of resale homes in the suburban areas dipped 0.9 per cent, while those in the city fringe declined 0.7 per cent.
About 387 non-landed homes were resold in November, down 22.9 per cent from October. On a year-on-year basis, this represented a 62 per cent drop from the 1,019 units transacted in November 2012.
Meanwhile, rentals of private condominiums remained flat after three months of decline, and median rentals of HDB flats dipped by S$50 to S$2,350, the first dip since June 2012.
Some market watchers expect the rental market to maintain rentals at existing rates at best, with landlords more keen to retain current tenants or sign new leases at slightly lower rents. - CNA/ac/ms
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