By Joanne Chan, Channel NewsAsia | Posted: 18 January 2010 1729 hrs
SINGAPORE : Housing analysts said it is a sellers' market right now, with resale flats being a hot commodity lately.
But the Housing and Development Board (HDB) has urged buyers to exercise caution when paying high cash premiums, and to do their homework to determine if a house is truly worth its asking price.
A 4-room flat in Bishan was recently put up for sale. It was valued at S$460,000 by an independent valuer appointed by HDB, and the owners are asking for an additional S$100,000 cash-over-valuation (COV).[an amount you pay above the valuation of the house]
The owners, who declined to be named, are a young couple in their 30s who run an F&B business. They claimed to have received three offers so far, but all were rejected.
"The COV is too low. There are those who are asking for S$50,000 to S$60,000. There was one offer which was close, about $95,000. We are not in urgent need to sell. In a way, it's to test the market. If we sell, we sell. If we don't sell, we will just continue to stay," said the owner of the 4-room flat in Bishan.
Analysts said with a continued strong demand for resale flats, owners are taking advantage of the situation to increasingly ask for higher prices.[increase in dd, movement up the supply curve--> price of houses increase]
Based on the latest HDB figures, 78 per cent of home sales transacted in the third quarter of last year were above valuation. [pt to consider: who are the buyers? foreigners who are cash-rich?why the rush to buy the houses? are they irrational?]That is a 22 percentage-point jump from the second quarter of last year's figure of 57 per cent.
The median COV is also on the rise - jumping from S$3,000 in the second quarter to S$12,000 in Q3.
With HDB resale flat prices hitting an all-time high, housing agents said most flats now command at least S$20,000 to S$30,000 cash-over-valuation.
Units situated at good locations, close proximity to an MRT station and good renovation[factors influencing the price of houses] can see COV go up to S$50,000 to S$70,000.
But there is a limit to how much buyers are willing to pay.
"If it's not to my liking, then I'd have to do up, (renovate) it again. So how much (am I willing to pay)? About $50 to $60,000," said one member of the public.
"It's too high for me. Because of my income I don't think I can afford it," said another.[income constraint]
HDB said only four out of the 13,000 4-room flats sold last year had premiums higher than S$70,000.
And analysts cautioned against jumping into deals that require high cash premiums.
"COV is a premium. Five years down the line, the renovation will deteriorate. And there's no guarantee that you can sell at S$100,000 above the then value. Therefore, buyers should exercise discretion as far as how high you want to pay," said Mohamed Ismail, CEO of PropNex.[sources of info from experts]
HDB said it does not control resale flat prices as they are the result of negotiations between willing buyers and sellers.[left to the workings of dd and ss, price mechanism]
It added that intervening in COV means forcing people to buy and sell at fixed prices.
HDB also urge buyers to have the relevant information[being informed consumers. remember, when we study econs, we have always assumed that consumers have full information. but is this true in the real world? :)] before negotiating with sellers, and to offer a price within their means. - CNA /ls
No comments:
Post a Comment