Tag Archives: COV

Forget COV, welcome to CUV

The days of COV (cash-over-valuation) are already coming to an end as incidents of CUV – cash-under-valuation transactions – become more common in all sectors of Singapore’s property resale market.

Examples of property buyers having to pay as much as S$100,000 above valuation were fairly common until recently. Now the balance is shifting and there are increasing numbers of transactions involving sellers accepting offers below, and in some cases significantly below, the valuation price of their property.

One Singapore real estate agent cited recent examples where sellers were willing to accept offers significantly less than the valuation price. One private property, valued at S$1.42 million, is likely to be transacted at S$1.25 million, the agent told PropertyGuru on condition of anonymity.

Evan Chung, Vice President of the Resale Division of real estate agency DTZ, said: “CUV transactions have already been transacted and are on the increase.”

Citing recent HDB data, Chung said that 28.5 percent of HDB resale deals during January 2014 were closed below valuation.

“Areas such as Sengkang and Jurong West are now seeing about half their transactions clocking in negative COVs, and I believe the percentage of CUV transactions will continue to rise over the year and likewise, we’ll see HDB valuations come down accordingly.”

Public data analysed by PropertyGuru this morning focusing solely on Jurong West showed average per sq ft prices for resale HDB properties in January 2014 stood at S$406. This was unchanged from the previous month but down from the S$426 per sqft one year earlier – a decline of 4.47 percent year-on-year.

Chung said that units in mature estates, and in good locations near MRT stations or a shopping mall, will still continue to see demand and command a certain COV.

“This is especially for units that are nicely renovated,” he added.

“For home buyers, the current trend is highly welcomed and I can say the cooling measures and increase in BTO supply have achieved their desired effect.

“However, I believe the authorities will be wise enough to ease off some of the measures in the near future, otherwise the displeasure that buyers have faced over the last few years will eventually be transferred to home owners when they see their property value erode too fast and by too much,” he concluded.

The flip side, of course, is that there are potential bargains on offer for serious buyers with finances in place.

Lucas Tan recently purchased a four-room HDB resale property in Tampines.

He said: “There were four almost identical properties on the market, but three of the four sellers were unwilling to negotiate. They were still living in last year in terms of prices.

“I eventually did a deal with the only seller who was being realistic and was willing to negotiate.”

Tan confirmed he paid under the valuation price for his property.

Andrew also contacted PropertyGuru to explain his situation.

He said: “I sold my 19-year-old 151 sqm freehold apartment in District 15 in November for S$1.43 million – about S$885 per sq ft. I was hoping for S$1,000 per sq ft but with more than 20 viewings in five weeks it was finally sold to a neighbour.”

He added: “To me this was a little low considering the newer though smaller-sized units were going at S$1,300 for resale.  However I decided to sell as I had lost my job, and I expect prices to drift lower by about 20 percent in the next few years, and will not recover unless the controls are significantly eased.”

Source : Property Guru 13 Feb 2014

COV falls to lowest in about a year

The overall cash premium or Cash-Over-Valuation (COV) for HDB resale flats has fallen to its lowest in about a year.

This is according to flash estimates by the Singapore Real Estate Exchange (SRX).

The overall median COV fell by 15.2 per cent in the second quarter of the year to S$28,000, down from S$33,000 in the first quarter.

The previous low was S$26,000 in the second quarter of 2012.

Meanwhile HDB resale transactions fell by 31 per cent in the first half of this year compared with the same period in 2012.

A total of 7,555 flats were transacted in the first half of 2013.

ERA Realty Network’s key executive officer, Eugene Lim, said: “The June COV was $24,000. It has trended downwards. We are likely to see COV continue to trend downwards and quite possibly by the last quarter, we could see COVs around the $20,000 region.

“When it hits the $20,000 region, I think we may see more buyers entering the market, because it’s a figure that’s generally acceptable to buyers.

“(So we could have more buyers entering the market) instead of them wanting to wait three years for a HDB BTO (flat).”

On the private housing front, transactions for non-landed private resale units fell by 42 per cent in the second quarter, compared with the same period one year ago.

But the 2,024 units moved in the second quarter of this year were slightly higher than in the first quarter.

In the month of June, resale prices of non-landed private residential units showed an overall increase of 1.8 per cent, according to flash SRX estimates.

Source – CNA – 5 Jul 2013