Fingers are kept crossed that new housing policies will bring COV for HDB resale down

With continued high demand for resale flats, owners are taking advantage of the situation by demanding for higher cash-over-valuation (COV) but with the raising of the HDB and EC income ceiling hopefully they taper off high prices, says an ECG Property expert.

PM Lee Hsien Loong announced during the National Day Rally on Sunday (Aug 14) that HDB income ceiling will be raised from $8,000 to $10,000 and for ECs from $10,000 to $12,000 – a move that is seen to impact the mass market condos.

“As for HDB market, the demand has outstripped the supply. HDB owners with private properties are not selling their flat and this has led to a supply crunch and resulting in the sky high COV. Hopefully the new measures can help put a lid on the COV and bring them down to realistic levels,” ECG senior district director Eric Tng.

“I feel the impact on BTO should not be high. Most first-timers for BTO flats are the younger newly-weds and their household income would be around the $8000 level. But for ECs, it should take off some demand for newly launch mass market condos. And HDB resale buyers with household income of $8000 to $12000 will consider buying an EC instead of a resale flat,” he added noting that ECs are priced about 20% lower than mass market condos and have better capital appreciation potential.

As for the private market, the expert sees low bearing of the new policies.

“I dont think these measures will affect the private market as the measures are targetted at first-time houseowners competing in the HDB resale market. I feel its also a reaction to the recent loss of votes in the GE,” said. Mr. Tng.

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