Fewer buyers paid COV for resale HDB flats in 2023, property market expected to moderate further - The Straits Times

SINGAPORE - Fewer buyers paid cash over valuation (COV) for their resale Housing Board flats in 2023, with about 15 per cent of buyers forking out COV for their units in the last three months of the year.

This is down from almost 30 per cent of resale HDB flat buyers paying COV for their units in the same period in 2022, said National Development Minister Desmond Lee on Jan 15.

COV is the difference between the sale price of a flat and its actual HDB valuation, which can be paid for only in cash by the buyer.

In his speech at the Built Environment and Property Prospects seminar organised by the Building and Construction Authority and Real Estate Developers’ Association of Singapore, Mr Lee said the median COV paid has remained relatively stable at about $30,000.

Overall, the rate of increase in property prices has moderated, he added, citing how HDB resale prices increased by 4.8 per cent in 2023 based on flash estimates – less than half of the 10.4 per cent jump in 2022.

Private property prices rose by 6.7 per cent in 2023, compared with 8.6 per cent the year before.

“We expect this moderation in the property market to continue,” Mr Lee said, reiterating Prime Minister Lee Hsien Loong’s New Year’s message that geopolitical uncertainties will continue to weigh on the global economy in 2024, impacting global economic activity. Singapore is not expected to be immune to these effects.

Domestic mortgage rates – which currently stand at between 3.7 per cent and 4.4 per cent – are expected to remain high, said Mr Desmond Lee. This could have repercussions for existing home owners and prospective home buyers, as well as firms that are over-leveraged or have too much debt.

In terms of supply, he noted that about 43,000 homes were completed in 2023. Another 28,000 are due in 2024, and 24,000 in 2025 for a total of nearly 100,000 private and public homes between 2023 and 2025.

Mr Lee urged buyers to be prudent in their purchases and avoid over-extending themselves as “housing prices are unlikely to sustain the momentum they have seen in the past three years”.

In providing the property market outlook for 2024, Mr Lee noted that HDB resale and private housing prices had risen, while application rates for Build-To-Order (BTO) flats were high.

The Covid-19 pandemic had disrupted housing supply over the last four years. At the same time, demand for housing remained strong.

Some people were worried about the delayed completion of BTO flats and decided to turn to the resale market. Demographic changes in society and smaller household sizes also contributed to the demand, Mr Lee said.

The Government introduced a range of measures, including increasing the additional buyer’s stamp duty in 2023, and ramped up new supply of BTO and private housing, which helped to address the supply-demand imbalance, said Mr Lee.

The 43,000 homes completed in 2023, which included 21,400 HDB flats, are the largest number of homes completed across the HDB and private market in a year since 2018, he added.

“It has been quite remarkable, considering the built environment sector was just emerging from a pandemic.”

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