Total sale prices likely to be steady or higher while upfront cash demands may continue to slide.
WHILE quiet may prevail in the private homes market, the resale market for HDB flats offers another picture - one filled with steady activities.
Still, a number of potential HDB resale flat buyers are kept out of the market by the high upfront cash sums that some sellers demand.
These cash sums are on top of the valuation price of a flat and can be paid only in cash.
Last year, when HDB resale prices rose 17.5 per cent in line with the private property boom, many sellers rode on the buying wave and started asking for cash- over-valuation sums ranging from $50,000 to more than $100,000.
For those who are holding off their HDB purchases for a lower price, property agents say cash- over-valuation amounts could continue to slide. But HDB resale flat prices are unlikely to tumble in the foreseeable future, they say.
‘The HDB market is still very healthy,’ said Mr Chris Koh, director of Dennis Wee Properties .
Resale prices are still rising - albeit at a slower rate than last year - as valuations have generally risen, property agents say.
Even if the cash-over-valuations are slightly lower than late last year, the total resale price will still be steady or higher.
ERA Realty Network’s assistant vice-president, Mr Eugene Lim, said his firm expects the first-quarter HDB resale price index to show a marginal rise of 3 per cent or less.
The resale price index increased by 5.7 per cent in the fourth quarter of last year.
Cash-rich en-bloc sellers
‘WE ARE still seeing en-bloc sellers downgrading to the bigger HDB flats such as the executive flats,’ said Mr Koh.
With their $2 million or so sales proceeds, some en-bloc sellers, especially the retired ones, prefer to buy an HDB flat to live in and a small private property for investment, he said.
Meanwhile, some of the HDB resale flat buyers are downgrading to smaller flats.
As a result, there is more sales activity among three- or five-room flats and executive flats, said Mr Koh.
He said some collective sale sellers are of the view that the private property market will fall some time down the road.
This group would buy an HDB resale flat to live in while they wait for a good time to enter the private property market, he said.
They need to live in their resale flats for only one year before they can sell them, if they are taking a bank loan for the purchase.
Those who take an HDB loan for a resale flat purchase have to live in it for 21/2 years before they can sell it.
While this group may not be big, they do help to prop up the HDB market to a certain extent.
Lower upfront demands
THE Government has increased the supply of HDB flats as its stock depletes, and has assured the public that it will boost supply when needed.
As buyers now have more choices, some agents are taking double the time to sell resale flats, compared with around one month on average late last year, said Mr Eric Cheng, executive director of HSR Property Group.
Because of the weak sentiment in the private homes market this year, HDB flat sellers have also become more realistic in asking for lower sums of cash, property agents say.
Today, sellers in prime areas like Holland and Tiong Bahru may ask for $35,000 to $60,000 cash, compared with maybe $80,000 to $100,000 last year, said Mr Cheng.
Mr Koh said cash-poor buyers need not consider only far-out areas like Marsiling. They can also look at towns such as Yishun, Tampines, or Pasir Ris, where sellers are now asking for less cash.
The HDB recently said its records for last month showed that about a quarter of the resale flats were transacted at prices not exceeding $10,000 above market valuation. These included those in more established towns such as Ang Mo Kio, Bedok, Tampines and Yishun.
Such cash-over-valuation levels of below $10,000 for flats in established towns are attractive in today’s market, said Mr Cheng.
Those who do not have an urgent need for a place to live in can wait a little longer to see if they can buy a resale flat with a smaller cash sum, say some property agents. But do not expect the valuation price to fall just yet.
Numerous options
Cash-poor buyers need not consider only far-out areas like Marsiling, says Mr Chris Koh, director of Dennis Wee Properties . They can also look at more established towns such as Yishun, Tampines, or Pasir Ris, where sellers are asking for less cash.
Source : Sunday Times - 30 Mar 2008
Loading ...