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§ (G.1) Higher Cash-Over-Valuation (COV) fetched by HDB flats

In the fourth quarter of 2007, a total of 269 HDB flats were sold for $500,000 or more. This is a 69% increase over the 159 flats sold for more than $500,000 each in the third quarter. And 12 resale flats were transacted at $700,000 or higher.

Larger HDB flats in central locations are commanding higher premium than before. The $890,000 transacted price for a 21st-storey executive flat along Mei Ling Street in Queenstown is a case in point.  Last November, another executive flat along the same street went for a then-record $780,000.

Such a trend will push up demand for entry-level private homes for two reasons:

— The price gap between public housing and private homes has narrowed as a result of higher COV; and sellers of such flats will have the financial muscle to buy mass market private homes.

— Secondly, new homeowners could also consider a private condo, rather than a resale flat for their first home, as there would be very little cost savings when buying a resale flat.

The detailed breakdown of HDB flats sold for more than $500,000 in the 3rd and 4th quarters of last year is as follows:

§ (G.2) Quantity of HDB resale transactions down but more larger flats sold

The number of HDB resale transactions had fallen to a new record low in 2007 - with only 29,436 transactions. This happened as buyers started to resist higher cash-over-valuation (COV).

The whole year transactions of all resale flats are as follows:
 

The transaction figure was lower than the previous lowest record of 29,723 set in 2006.

After some strong growth in the second and third quarters, the stock-market jitters in the fourth quarter caused some prospective buyers to stay on the fence, causing resale transactions in the last three months of 2007 to fall 13% to 6,748.

However, on the whole, a healthy economy actually propelled the resale prices 17.5% higher for the whole of last year. In the fourth quarter, HDB resale prices rose 5.7%, lower than the increase of 6.6% in the third quarter.
In the fourth quarter, 86% of all resale transactions required COV, up from 80% in the third quarter. The median COV amount also increased to $22,000 in the last three months of the year, from $17,000 in the previous quarter.

However, a higher number of larger flats such as five-room and executive flat were transacted in 2007 as compared to a year ago.

For the whole year, the number of five-room resale transactions rose 13.3% to 7,275; while the number of executive flats resale transactions rose 17.9% to 2,627 as compared with 2006.

§ (G.3) Queenstown flat sold for record $890,000

A 13-year-old 21st storey executive flat in Block 150, Mei Ling Street, was sold for $890,000. The executive flat in Queenstown comes with expansive views of Sentosa and Mount Faber.

The current owner of the 1,614 sq flat reportedly paid only $300,000 for it in 1992.

Before this transaction, the highest transacted price for an HDB flat in the central area was $780,000 for a similar Executive flat in Mei Ling Street in November 2007. Five other similar executive flats in the same locality were also sold in the November/December period at prices ranging from $728,000 to $765,000.

A five-room resale flat in nearby Kim Tian Place was sold for $720,000 last June.

§ (G.4) 4-room Jalan Membina flat sold for $590,000

A five-year old four-room flat at Blk 21 Jalan Membina, which has a fabulous view of Sentosa, and a superb location near Tiong Bahru MRT station and Tiong Bahru Plaza was sold for a record $590,000 in the beginning of the year. 

HDB's latest data show four-room units in the same area sold for $415,000 to $495,000 late last year.

§ (G.5) A better economy contributing to an ‘upgrading’ trend in 2008

The two tables (5.1 and 5.2) below give a good impression of the transactions of the different flat types in the last couple of months. Demand for larger flats continues to hold up well.

— In January 2008 five-room flats enjoyed a 25.88% share (or 597 transactions) of the total monthly transactions, a marked improvement from the 24.87% share (or 486 transactions) a month ago.

— In the same month, Executive flats took up 8.32% share (or 192 transactions) of the total monthly transactions, an increase from 7.52% share (or 147 transactions) in December 2007. The 45 more units sold in January 2008 represent a 30% improvement in sales volume.

The higher demand for larger flats may reflect an improving economic prospect, wage increases and a general ‘upgrading’ trend.

 Prepared by Sam Gian - Independent Real Restate Sales Trainer