By Romesh Navaratnarajah: After falling more than 20 percent in Q1 of this year, cash-over-valuation (COV) figures for resale HDB flats seem to be stabilising and luring buyers back into the market, according to experts.
In Q2, HDB's resale price index (RPI) climbed 1.3 percent quarter-on-quarter from 191.6 to 194, an indication that flat prices were higher than in the period before.
"The stronger price growth exhibited could be a result of decreasing COVs and increasing valuations in the market," said Eugene Lim, Key Executive Officer at ERA Realty Network.
"Valuations are catching up with selling prices and median COVs have been reduced to S$25,000 in June 2012. Reduction in COVs encourages buyers to commit to flat purchases resulting in rising resale prices."
At the same time, transaction volumes grew eight percent to 5,549 from 5,126 in Q1, based on data from ERA.
Industry watchers noted that the climb is due to the increasing number of second-timers opting for resale units instead of Build-to-Order (BTO) flats.
Mohamed Ismail, Chief Executive Officer at PropNex Realty, said: "With the moderation of HDB resale prices in Q1 2012, buyers who did not qualify under the BTO purchase requirements like the singles, permanent residents, HDB upgraders and downgraders, are still purchasing in this market segment."
The estates that witnessed the highest number of Q2 resale transactions include Yishun (median resale price: S$377,000), Woodlands (median resale price: S$415,000) and Jurong West (median resale price: S$449,000). Related Stories: First batch of flats in Bedok to benefit from EASE
HDB issues S$585m fixed rate notes due 2024
Woodlands flats marked for SERS