31 | August | 2009 | Lush Dream Home

Daily Archives: 31 Aug 2009

How HDB keeps it affordable

Posted on 31 Aug 2009 | Comments Off

WE REFER to the letters, ‘High HDB prices: Squeezed even harder’ and ‘Two shortcomings: Public housing too correlated to private market, and HDB has not regulated supply’ (both Aug 22); and ‘Flat hunting: Why was cash over valuation ever introduced?’ (Aug 20).

Cash over valuation: Resale flat prices are the result of negotiations between willing buyers and sellers. Cash over valuation (COV) arises when buyers are willing to pay more than the market value of the flat, as determined by professional valuers.

However, for financial prudence, HDB and the banks will provide a loan of only up to 90 per cent of the market valuation. Therefore, if a buyer is willing to pay more than the valuation, the excess will need to be paid in cash, thus the term cash over valuation.

COV is not determined nor imposed by the Government. However, we can expect a flat seller to ask for as high a price as possible. On their part, buyers should first arm themselves with relevant information before negotiating with flat sellers. Continue reading →

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Tagged HDB, Singapore Property

Act now to prevent a housing bubble

Posted on 31 Aug 2009 | Comments Off

Banks should tighten lending terms to head off possible mortgage defaults

Some see a striking resemblance between the 2002 US housing boom and Singapore’s real estate rally now.

IN JANUARY, as the global financial storm lashed Singapore shores, fears took hold that large numbers of cash-strapped home owners might default on their monthly mortgage instalments, as businesses went belly-up and jobs were lost.

DBS Bank went out of its way to calm the jitters by offering to resurrect the interest-only payment scheme to allow borrowers to make only interest payments on their home loans, to give them breathing space to sort out their finances.

Only months later, in a surprise to many, the tide turned and there was a huge revival in the residential market. The gloom lifted as confidence grew and buyers rushed back to snap up properties – despite the stress that continued to be felt in the corporate sector.

The statistics are impressive. In the second quarter, 10,184 HDB resale flats changed hands – up from 6,446 units in the first quarter and 7,763 units in the same quarter last year. Continue reading →