The cash premium that home buyers have to pay upfront for HDB resale flats has continued to slide in November, said National Development Minister Mah Bow Tan.
In an exclusive interview with Channel NewsAsia, Mr Mah said the median cash-over-valuation (COV) was S$22,000 last month, down S$3,000 from October.
This is the second straight month that COV has come down, a further sign that the property cooling measures introduced in August have taken effect.
Among the measures introduced include barring home buyers from owning both an HDB flat and a private home within the Minimum Occupation Period.
COV hit a high of S$30,000 for two straight quarters this year, sparking concerns that first-time home buyers might be priced out of the resale market.
Mr Mah said he recognised that home buyers feel a “sense of anxiety” when they see prices rising but noted that prices appear to be on a downward trend.
“Now you are seeing that resale prices and COV are not only stabilising, but are starting to come down. So I think there’s really no need to rush. If you can afford to wait, you buy a BTO (Build-To-Order) flat which is cheaper. If you cannot afford to wait, or you want a particular location where a BTO flat is not available, go for the resale market,” said Mr Mah.
When asked if the government plans to introduce more cooling measures, Mr Mah said there’s no need for further action now.
He added that he will take further steps only if necessary.
Mr Mah said the number of resale transactions has also fallen by some 30 per cent in the fourth quarter, compared to the third quarter.
Mr Mah noted that the full impact of the cooling measures will only be felt in another one to two months.
Property firms said they are also seeing COV and transaction numbers falling.
Dennis Wee Group (DWG) saw a 7 per cent drop in sales numbers in November compared to October.
DWG Director Chris Koh said homes in non-central regions such as Jurong and Sembawang were affected first.
COV for larger flats dropped S$5,000 to S$25,000, while COV for 4-room and smaller flats dropped from S$25,000 to S$20,000.
But Koh said that prices in the central region are still holding.
And one firm expects the cash premium to drop to S$20,000 by December.
“Things usually slow down because of Christmas, New Year, school holidays, when people are overseas. So going by trend, at the end of the year, things usually slow down. And with the measures in place and new flats coming up, we should see demand ease off a little,” said Koh.
On the supply side, Mr Mah said there are no plans to reduce the number of new flats being released, and 22,000 units will be offered next year.
Demand for new flats appeared to have cooled for the last few launches, with 2 to 3 applications received for each available unit. This is in sharp contrast to earlier this year, when projects were more than 6 times oversubscribed.
While prices appear to have stabilised, Minister Mah acknowledged that housing matters will be a key issue at the next General Election.
“It’s always been an issue at every election as far as I can remember. But this time round, it would probably be more than an issue,” said Mr Mah.
Mr Mah, who’s been a Tampines GRC MP for 22 years, said he welcomes a contest from opposition parties.
National Solidarity Party’s Goh Meng Seng has said he plans to contest in Tampines.
Source : Channel NewsAsia – 6 Dec 2010