Press release -

Price growth stagnates on rising COVs

With fewer resale flats on the market as a result of the Government’s cooling measures announced over the last one year, the Resale Price Index (RPI) has inched 2.9% up to a new record high of 179.9, according to HDB’s release of the 2Q11 flash estimate today.

This is in line with PropNex’s 2Q11 data, which also reflected both rising median resale prices as well as soaring Cash-Over-Valuation (COV) levels. PropNex has over 25% of the HDB resale market share, counting unique property transactions, instead of agent transactions.

“Buyers who took 1Q11 to understand the cooling measures announced on 13 January 2011, especially the lower 60% Loan-To-Value ratio and revised Minimum Occupation Periods, have come back to buy on the resale market,” says PropNex CEO Mr Mohamed Ismail. “However, there are still many owners who, due to the cooling measures, are reluctant to move or sell their flat, resulting in a supply crunch and driving median resale prices as well as COV levels up.”

PropNex’s Median Resale Prices by Flat Types  

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PropNex’s Median COV by Flat Types

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“PropNex’s data does preempt HDB’s figures by a few weeks,” notes Mr Ismail, “due to the fact that our figures are based on when transactions are submitted to us upon exercise of the Option, whilst HDB’s data is based on the registration of the resale. Still, our figures clearly indicate a sharp upward trend in the COV levels across the board.”

While median resale prices have gone up Q-on-Q by 2.6% to 5.3% for 2Q11 across the various flat types, higher than the anticipated 2% to 3%, median COV levels have rocketed up by some 40% to 50% Q-on-Q to stand at an overall $32,000 for 2Q11.

“Although the current levels of $28,000 to $45,000 COV are not sustainable in the long run,” says Mr Ismail, “I expect the momentum of the increase to see overall median COV reaching around $35,000 in 3Q11, before dropping back to an overall median COV of around $32,000 for 4Q11.

“One reason,” he elaborates, “would be that the introduction of even more new flats, comprising BTO, DBSS and Executive Condominiums, will have a cooling effect on the resale market as more young couples turn from resale flats with high COVs to a wider choice of new flats with a lower price tag.

“Another reason would be the launch of more mass market projects in the next two quarters, alleviating some of the demand on the HDB resale market, especially for the larger flats in pricier estates.”

“We can even expect to see COV levels continue to decline further into 2012,” says Mr Ismail, “if the Government continues to provide new supplies of public housing at the current brisk rate.” He is cautious, however, about linking current price movements to Minister Khaw’s recent policy changes as he feels that it is still too early for those announcements to have had any noticeable effect. Moving forward, Mr Ismail expects to see the HDB RPI to increase by a total of about 8% to 9% for 2011.

In the private property market, URA’s price index 2Q11 flash estimates saw a 1.9% increase Q-on-Q to another record high of 202.8, with the Core Central (CCR), Rest of Central (RCR) and Outside Central (OCR) regions chalking up incremental increases of 1.6%, 1.2% and 1.6% respectively.

“In addition to the cooling measures announced in early 1Q11,” says Mr Ismail, “the transparency of Minister Khaw’s blogging, as well as the increased supply of new launches and land sales, has resulted in a moderation of prices, particularly in the RCR and OCR regions.

“However, with comparatively fewer launches in the CCR, it is not surprising to see a marginal increase in the region’s price index.”

With increased supply anticipated, Mr Ismail expects prices to further soften, resulting in an overall 6% to 7% increase in the private property price index for 2011. 


  • Housing issues


  • resale flats on the market
  • propnex
  • cash-over-valuation
  • resale prices

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