Tag Archives: Straits Times

Focus less on COV, more on latest transacted price.

To reduce the FOCUS on Cash-Over-Valuation (COV) in negotiations during the sale of a flat, the Housing and Development Board (HDB) will only accept valuation requests from resale flat buyers after they have been granted an Option to Purchase by flat sellers. The latest change will take effect from 5pm March 10, 2014. revised hdb procedure

 Previously, sellers usually got a request for a valuation from HDB  first and then negotiated with buyers over how much more or less should be paid. The excess cash over valuation is known as the COV. Buyers and sellers  will now have to agree upon a price first before getting an official valuation and Housing and Development Board (HDB) will only accept valuation requests from resale flat buyers ( yes, only buyer and they have to pay for it ) after they have been granted an Option to Purchase by flat sellers. Under the new rules, buyers who are granted OTP will also have 21 calendar days, instead of 14 calendar days to exercise the OTP, to adjust to the new procedure. The aim is to  get negotiations to focus on recent transaction prices and reduce the focus on COVs. Currently, resale prices are published twice a month. With immediate effect, HDB will also publish daily prices of resale transactions as soon as they are registered.

While the balance between buyers and sellers has been re-titled, the market is still at very high price, is not at its optimal state, and thus it is premature to withdraw cooling measures, Mr Khaw said.

While it is still too early to gauge the impact of this latest policy, I guess the buyers now will tend to make an offer more conservatively  based on recent transaction prices range to avoid not being able to get the loan amount.

Source -  HDB, Straits Time
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First annual decline in Resale Price Index (RPI) for HDB since 2005

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Average prices of HDB resale flats fell for the first time since 2005 last year. Data released by the Housing and Development Board (HDB) showed that the Resale Price Index  RPI fell 1.5 per cent from 204.8 ito 201.7 n then the last three months of the year 2013 .

Year
Quarter
Index
% Change from Previous Quarter
2013
IV
201.7
-1.5%
III
204.8
-0.9%
II
206.6
0.5%
I
205.5
1.3%
2012
IV
202.9
2.5%
III
197.9
2.0%
II
194.0
1.3%
I
191.6
0.6%
2011
IV
190.4
1.7%
III
187.2
3.8%
II
180.3
3.1%
I
174.8
1.6%
2010
IV
172.0
2.5%
III
167.8
4.0%
II
161.3
4.1%
I
155.0
2.8%
Source – HDB

The number of resale transactions for 2013 dropped 28 per cent to 18,100 — the lowest volume since 1997 since HDB started keeping records. Subletting transactions also fell by 3 per cent from 7,505 cases in Q3 of last year to 7,268 cases in the fourth quarter.

Resale Cases Registered between 1st Quarter and 4th Quarter 2013
Quarter
1-Room
2-Room
3-Room
4-Room
5-Room
Executive*
Total
1Q2013
1
159
1,362
1,523
962
328
4,335
2Q2013
3
185
1,640
1,922
1,070
415
5,235
3Q2013
2
172
1,377
1,670
969
339
4,529
4Q2013
1
132
1,251
1,524
784
309
4,001
Total
7
648
5,630
6,639
3,785
1,391
18,100

 

Source – HDB

Fall in HDB resale price is expected due to the many measures imposed by the government especially the mortgage servicing ratio of 30 per cent and also the maximum loan term of 25 years which I have mention in my previous blog entry in Aug 2013.  This measures reduce the buyers’ ability of getting a higher loan to buy a bigger flat. In addition, Singapore Permanent Resident Households need to wait three years from the date of obtaining SPR status, before they can buy a resale HDB flat. The impact of these policies announced recently on HDB resale prices has slowly surfaced. 

Median Cash Over Value or COV have also drop by quite a fair bit. Interestingly, look at Punggol’s figure in the table below. Average COV is $0 for 4 and 5 Room flats. Will COV continue to drop further this year? Will it draw more potential buyers back to the resale market? We shall see.

Median Cash-Over-Valuation (COV) for Resale Cases Registered in the 4th Quarter 2013
Town
1-Room
2-Room
3-Room
4-Room
5-Room
Executive
Ang Mo Kio
*
$10,000
$15,000
*
*
Bedok
*
$5,000
$15,000
$23,500
*
Bishan
*
$32,500
*
*
Bukit Batok
$7,000
$10,000
$20,000
*
Bukit Merah
*
*
$18,000
$30,000
$42,500
Bukit Panjang
*
$8,000
$3,000
$25,000
Bukit Timah
*
*
*
Central
*
*
*
*
Choa Chu Kang
*
$0
$5,000
*
Clementi
$8,000
$15,000
*
*
Geylang
*
$8,900
$15,000
*
*
Hougang
$5,000
$5,000
$10,000
*
Jurong East
$7,500
$10,000
*
*
Jurong West
*
$9,000
$5,000
$2,000
$20,000
Kallang/Whampoa
*
$10,000
$30,000
*
*
Marine Parade
*
*
*
Pasir Ris
*
$6,500
$8,500
$19,000
Punggol
$0
$0
*
Queenstown
*
$10,400
$37,900
*
Sembawang
*
$4,500
$8,000
*
Sengkang
*
*
$3,000
$5,000
*
Serangoon
$12,000
$15,000
*
*
Tampines
$6,500
$9,500
$10,000
$30,000
Toa Payoh
*
$9,300
$28,000
*
*
Woodlands
*
$8,000
$3,300
$6,000
$23,000
Yishun
$3,900
$7,000
$12,900
*

 

Source - HDB, Straits Time



Post you might be interested -
Cooling measures – Maximum tenure for HDB housing loans cut to 25 years
HDB COV $20000, lowest in 30 months, since 2011
More HDB resale with $0 COV
COV going south again
 


Open Listing vs Exclusive Right to Sell

Below is an interesting article abstract from The Straits Times in 1988. I think it still apply in today’s market. Enjoy.

Open Listing vs Exclusive Right to Sell

Source – The Straits Times, October 21,1988

An OPEN listing is when the seller of the property has to pay a commission to the broker who made the sale, but the seller reserves the right to sell the property on his own without paying a commission. Open listings may be given to any number of brokers on the same property.

An EXCLUSIVE right to sell agreement is a listing agreement whereby the seller is obliged to pay a commission to the broker with exclusive right to sell a property during a stated period, even if the owner makes the sale himself.

Some owners prefer the open listings because they believe the property will be sold more quickly when several brokers, rather than just one, are seeking buyers. Open listings is also favored by owners who hope that they will be fortunate enough themselves to find buyers and thus be able to save on the commission.

Some brokers prefer the open listing because they do not want the obligation to spend time and money in trying to make a sale that is implied in an exclusive right to sell contract. Such brokers prefer to build up a large file of open listings and wait for buyers to take the initiative in seeking properties they want to acquire.

They will often take a listing at any price regardless of the current market conditions. Their policy is to wait for an offer – any offer – for consideration by the owner. There broker are reluctant to accept responsibilities. They want to avoid hard work. Hey are content to drift and wait for buyers to turn up and make offers. The disadvantage to the seller is that a considerable period of time may elapse before the property is sold.

The professional broker will prefer to work on exclusive listings. The following reasons why property sellers should consider giving broker the exclusive right to sell.

Exclusive Right to sell

  • EXCLUSIVE agency is the only way a real estate broker can serve his client properly. Would you rather have 10 lawyers represent you in a law suit, each working independently of the other? It is better to be represented by one agent then to be misrepresented by a dozen.
  • YOU would have the right to demand proper attention to the sale of your property. From a dozen brokers, you have no right to expect anything.
  • AN AGENT working only on exclusives can give each property proper attention and can afford to advertise it. He is more likely to effect a sale and at a better price.

If you would look to one agent only, you would know that he is advertising your property properly and that he can offer it freely in the best channels and in the best way to attract buyers because you and he would be protected against piracy.

 “Too many cooks spoil the soup” This is especially applicable to the sale of real estate. The present irresponsible freelance system only means an enormous loss of time and money. With an exclusive agency, you avoid the possibility of being sued for commission by brokers you had forgotten you have listed your property with. A competent and self-respecting agent would rather list 10 properties exclusively rather than 100 in a slipshod manner.

If your property is one of the 10, your chance of selling it, at a good price is better than if it is one of the 100. Some owners fear that an exclusive agency may prevent them from selling their property through some other source. THIS IS A MISTAKE. Any conscientious exclusive agent would be willing to serve his client’s best interests, even if it means dividing his commission with another broker who may have a customer. The owner can and should keep his agent advised of all enquires he may get, and work with him.

If you expect a broker to protect you, you should, as a matter of fairness and reciprocity, be willing to protect him by making him your exclusive agent.

Concentration applies to real estate business as to any other. You should, in your own interest, concentrate your business on one good brokerage firm, which in turn will give proper attention to your property.  The agent would also save you the annoyance of dealing with any Tom, Dick and Harry.

If you’re looking into selling your property, feel free to give me a call. I’m always looking for business.

Paul Ng
CEA Reg- R006490H
Hp: +6598803768
Email: paulng@hsr.com.sg
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Credit – Straits Times

 

Sea Horizon executive condo at Pasir Ris to launch at $800psf.

Sea Horizon, an executive condominium (EC) near Pasir Ris Beach will launch next week at an average price of $800 psf, industry players say, the highest so far for an EC.

The 495-unit Sea Horizon is located at Pasir Ris Drive 3/Pasir Ris Rise. Units range from 71 sq m two-bedders to 160 sq m five-bedders and penthouses.

Developers Hao Yuan Investment and Sustained Land said in a statement on Friday, 2nd Aug 2013 that the units at Sea Horizon will have full-height windows and some bedrooms will come with French balconies.

sea-horizon-ec-logo

Source – http://www.straitstimes.com , http://www.mcc.sg/

Singapore property market will ‘stay healthy’

price-growthThere will probably be a correction in property market prices but a crash is unlikely, said OCBC Bank’s chief executive officer, Mr Samuel Tsien.

Part of the reason for its resilience is because the Singapore market holds a certain appeal to investors, he said.

Still, rising interest rates and cooling measures will have an impact, Mr Tsien told The Straits Times at the sidelines of a major China forum at the Shangri-La Hotel yesterday.

“As a result of the different measures imposed by the Government in making sure that speculative demand has been removed, there will be a slowdown in market activities,” said Mr Tsien.

“I don’t think there will be a crash in the market. There will be some downward adjustment to prices but that is healthy in the long term.”

The Government has instituted seven rounds of property cooling measures since 2009, with the latest round in January.

Other moves aimed at reducing the froth in the markets include lowering limits on loans and raising stamp duties.

The measures have worked to stabilise prices.

In the three months to June 30, prices for mass-market apartments rose 3 per from the previous quarter.

But prices of homes in the city centre dropped 0.2 per cent in the second quarter, after growing 0.6 per cent in the first.

More recently, the central bank put new curbs on loans to prevent borrowers from becoming over-leveraged.

The outlook for interest rates is that they will likely rise in the next two years.

The United States Federal Reserve has indicated that it will start to slow the pace of its monetary stimulus programme and eventually raise interest rates.

The normalisation of rates will help OCBC, said Mr Tsien.

He also feels that the bank, as well as others, will benefit from normalising interest rates, as “it’s going to be beneficial to banks with a significant amount of Casa (current account, savings account) balances”.

This is true for OCBC, as its “Casa balances represent about 51 per cent of our total deposits”.

Casa accounts combine savings and checking accounts to encourage consumers to save with banks.

A higher Casa ratio would mean that a bank has access to a cheaper source of funds, because it pays out less interest on Casa and can lend at a higher rate.

“That will benefit OCBC Bank because lower-yielding deposits or zero interest rate deposits will be able to make some money as a result of the rising interest rates, by lending that money out to the market.”

Mr Tsien also took questions over the bank’s risk management practices, especially regarding the interest rate setting processes.

Last month, OCBC was among the banks here to be censured by the Monetary Authority of Singapore (MAS), and most were told to set aside extra funds to be parked at MAS at zero interest rates.

The amount that OCBC Bank has to deposit as additional reserves is between $700 million and $800 million.

Mr Tsien said that the impact is not significant, as it relates to the opportunity to earn interest on the amount.

He added that the bank has introduced a series of new checks to tighten the rates submissions process.

Sourced from : http://business.asiaone.com/news/singapore-property-market-will-stay-healthy

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