Some COVs turn negative

 Rising cash-over-valuations (COV) have been the gripe of home-hunters, but some have gotten lucky in Queenstown.

Between January and March, the median COV for executive flats there was a negative $6,000, meaning a buyer paid below valuation – a far cry from the $50,000 median COV for the same flat type in the same area, in the preceding quarter.

But the first-quarter median COV for executive flats in Toa Payoh was a staggering $63,500. This was the highest COV sum in the Housing and Development Board’s list released on Friday, which broke down flat prices for the first quarter. In all three instances, HDB noted, the figures should not be taken as representative as there were fewer than 20 resale transactions in those towns for those flat types.

Indeed, overall, the median COV for the first three months of the year stabilised at $25,000 after a marginal increase of just $1,000 – compared to the fourth quarter of last year which saw the COV double.

And the HDB’s resale price index rose more slowly as well, by 2.8 per cent, as the number of resale transactions slipped 5 per cent – in large part, some analysts noted, due to the huge cash-out-of-pocket sums being demanded by sellers.

Generally, resale flats in Bishan attracted the highest median COV of $32,000, followed by those in Punggol ($31,000) and Marine Parade, Central and Sengkang ($30,000).

The COV rose for three-, four- and five-room flat types in Kallang/Whampoa, where a five-room unit which previously drew a $16,600 COV now commanded $40,000. The trend was similar in Clementi.

“It could be that market is playing catch-up and that that people have bought flats in anticipation of the Circle Line,” said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

In general, “COVs are still going up but at a much slower pace and they might be starting to reach a ceiling”, he noted. But prices overall would continue to rise as “the valuation of resale flats will also rise”.

For those short on cash, Woodlands, Pasir Ris and Geylang were their best bets, with the median COV ranging from $20,000 to $22,000.

To meet demand, HDB said it plans to launch about 12,300 new Build-To-Order (BTO) flats by September, with 1,100 to be offered next month in Yishun and Jurong West. In addition, a Punggol executive condominium site on the Government’s Reserve List will be put up for tender early next month.

Source : Today – 24 Apr 2010