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Thread: Aug Cooling measures worked?

  1. #1
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    Default Aug Cooling measures worked?

    COV for HDB resale flats drop
    Dec 7, 2010 - PropertyGuru.com.sg

    Singapore’s cooling measures are now taking effect in the property market, with home buyers paying lower cash premiums for HDB resale flats and less resale deals are taking place in the market, said National Development Minister Mah Bow Tan.

    Mr. Mah said in an interview with Channel News Asia that the median cash-over-valuation (COV) paid by home buyers for HDB resale flats dropped to $22,000 in November, from $25,000 in October. This was the second straight month that the median COV has declined and a sign that the cooling measures implemented in end-August are now taking effect.

    However, he said the full impact of the cooling measures will only be felt in the next two months.

    He added that resale transactions have dropped by 30 percent in Q4 this year compared with the previous quarter.

    Though there is no need for any additional cooling measures for now, he said the government will implement further measures only if necessary.

    ----------------------------------------------------------------------------------------------

    After reading the report, I noticed MBT did not mentioned resales price trend. Out of curiosity, I did a sampling check for realse prices associating to 3 rooms HDB for 5 regions (AMK, Woodland, Tampines, Bt Merah & Jurong) with resales price information from HDB website.

    Interestingly, 3 reigions resales prices actually went up between 3.9% to 9.7% and two regions went up marginally -0.75% & -1.28% .

    For details, please see attached for information.

    Question: Is the cooling measures effective as reported?
    Comments from expert are welcome.

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    my topic? you wait for 1Q2011 data - more accurate.

    The above is not accurate cos I am the contributor for Nov data. Sept transaction is not accurate cos there is some spill over effect after the 30 Aug announcement. So you have to look at deals sealed in Oct & Nov and this will reflect in Jan / Feb 2011 data.

    in summary, the nett re-sale price will be lower.
    my 2cents.

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    Quote Originally Posted by rattydrama
    my topic? you wait for 1Q2011 data - more accurate.

    The above is not accurate cos I am the contributor for Nov data. Sept transaction is not accurate cos there is some spill over effect after the 30 Aug announcement. So you have to look at deals sealed in Oct & Nov and this will reflect in Jan / Feb 2011 data.

    in summary, the nett re-sale price will be lower.
    my 2cents.
    have spoke to some agents and they told me while COV is coming down... they noticed the valuation price goes up!

    Hence a reduction of 10k in COV was cancelled off with increase in valuation. Not sure total impact becos of this.....

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    strange to see valuation price going up since the nett price is lower.....MBT must be fuming.....will be more convinced to see data next month.

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    Quote Originally Posted by rattydrama
    strange to see valuation price going up since the nett price is lower.....MBT must be fuming.....will be more convinced to see data next month.
    Itsok if din sell at peak...leave some cream

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    Quote Originally Posted by devilplate
    Itsok if din sell at peak...leave some cream
    if hdb resale price drop drastically, u think the other group of ppl who bought the recent bto,dbss, and maybe EC will start to complain(to have bought too high price) or not

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    Its ok not to sell at peak but the market sometimes very difficult to time, it turned and suddenly no taker even u sell at huge discount. The next thing you know is that the developer is also fighting with u for the buyers’ pie. This will certainly depress and break the price of the not so good location condo and it will take some time to gain back the losses and that is where one needs to wait long long for the next price hike. Own experience/observation.

    With current price which is somehow at peak now, buying "location within a specific location" is most important.

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    Quote Originally Posted by rattydrama
    buying "location within a specific location" is most important.
    does this mean prime area? or near mrt in central? but these also will be selling at a very high premium.... their prices also can drop leh....

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    Quote Originally Posted by taggy
    does this mean prime area? or near mrt in central? but these also will be selling at a very high premium.... their prices also can drop leh....
    depending on your budget. can be OCR, RCR, CCR.....but some may disagree with me as they only believed in CCR. If I ever buy CCR, it wont be for own stay but for investment and that would be MM units.

    I have yet to convince myself buying MM units btw.

    location within a specific location means only the cream project in a particular region.

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    Quote Originally Posted by rattydrama
    strange to see valuation price going up since the nett price is lower.....MBT must be fuming.....will be more convinced to see data next month.
    I've noticed MBT did not mentioned resales price and he only mentioned COV. IF resales priceshad came down, do you think MBT would left it out and not mentioning at all?

    Per my understanding, for each new height in resales prices, it will further push the valuation price up..

    Take Woodland average resales data (from my earlier posts) for example, if COV came down from 30k (Aug) to 20k (Nov), then valuation in Aug would be $247k-30k= $217K while Nov Data valuation would be around $263k-$20k = $243k

    Comments?

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    Quote Originally Posted by westman
    I've noticed MBT did not mentioned resales price and he only mentioned COV. IF resales priceshad came down, do you think MBT would left it out and not mentioning at all?

    Per my understanding, for each new height in resales prices, it will further push the valuation price up..
    I am not too sure leh...if less demand how to up & up? What I know is transaction vol. will come down. If volume comes down, what about the price? This will go back to another question which is the demand and supply issue. And I think "new citizen/PR" will be the support for re-sale hdb.


    Quote Originally Posted by westman
    Take Woodland average resales data (from my earlier posts) for example, if COV came down from 30k (Aug) to 20k (Nov), then valuation in Aug would be $247k-30k= $217K while Nov Data valuation would be around $263k-$20k = $243k

    Comments?
    For flats that has been sold in Sept, the valuation report would have been done in Aug or before (you need to wait 2 weeks for the valuation report) and the valuation report is valid for 3 months. Buyer needs valuation report to get loan etc..... you have an inquisitive mind......not bad.

    so I will have to say better to wait for next quarter data.



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    Quote Originally Posted by rattydrama
    I am not too sure leh...if less demand how to up & up? What I know is transaction vol. will come down. If volume comes down, what about the price? This will go back to another question which is the demand and supply issue. And I think "new citizen/PR" will be the support for re-sale hdb.
    Partially agreed with you on this. With the lowering of transaction volume in resales market for condo, do we actually see a price down in psf since march? No hard feeling hor.

    Also, with each scaling of prices, valuation keep going up! I think such situation is happening to HDB too as pplk pay more attention to COV (which is cash) and less attention to total selling prices. it's not too difficult to conclude who will suffered at the end of the day.

    I guessed resales prices are advancing with some reduction in COV component.

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    Quote Originally Posted by taggy
    if hdb resale price drop drastically, u think the other group of ppl who bought the recent bto,dbss, and maybe EC will start to complain(to have bought too high price) or not
    Yes for sure and the feeling would be damn bad for seeing that happened!

    However, the question remained, with COV going down as claimed by report, then how to explain HDB prices are still edging up?

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    Quote Originally Posted by westman
    I've noticed MBT did not mentioned resales price and he only mentioned COV. IF resales priceshad came down, do you think MBT would left it out and not mentioning at all?

    Per my understanding, for each new height in resales prices, it will further push the valuation price up..

    Take Woodland average resales data (from my earlier posts) for example, if COV came down from 30k (Aug) to 20k (Nov), then valuation in Aug would be $247k-30k= $217K while Nov Data valuation would be around $263k-$20k = $243k

    Comments?
    How you do your maths?

    As long its COV, valuation can only go up not down. Be it 5K or 30K.

    Wait for PUV (Purchase under valuation) for prices to go down.

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    Quote Originally Posted by AK47
    How you do your maths?

    As long its COV, valuation can only go up not down. Be it 5K or 30K.

    Wait for PUV (Purchase under valuation) for prices to go down.
    Somehow, I share the same tot as you that as long as COV rule is in place, valuation can be very defficult to come down...

    As for the maths, I took the average for all 3 rooms flat transactions for AMK, Tampines, Woodland, Jurong and Bt Merah.

    You can refer to my opening post for detail as attached.
    For COV, I took the average 20K as reported (which is down from 30k).


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    I notice a rising valuation as well. I mean, just visit www.hdb.gov.sg and do data analysis yourself. I feel it is going up but others might feel differently (disclaimer first).

    If COV drops but prices rising, you know what I mean. Using COV as a price comparison factor is rubbish. May mislead a few but many will not take that. It is hard to swallow when the hdb that you want to buy is valued 20k higher 2 months later.

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    Well, it is easy to tweak the COV in my opinion. Just up the valuation and it is done. Sellers achieve the price they want and they sell it. Sweet, simple and effective. Especially when election is coming. HDB just lend more to buyers. People get house, they are happy. Sellers sell house, they are happy too. Perfect scenario? Not really. Wait till price correct and those buyers are in shit. Why? Ask yourself, did hdb over build hdb, just like 1990s. But it is not going to correct in the short term. When those who want to sell, sell their flats, then COV/valuation is going up again.




    Quote Originally Posted by westman
    I've noticed MBT did not mentioned resales price and he only mentioned COV. IF resales priceshad came down, do you think MBT would left it out and not mentioning at all?

    Per my understanding, for each new height in resales prices, it will further push the valuation price up..

    Take Woodland average resales data (from my earlier posts) for example, if COV came down from 30k (Aug) to 20k (Nov), then valuation in Aug would be $247k-30k= $217K while Nov Data valuation would be around $263k-$20k = $243k

    Comments?

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    some say drop in COV means lower valuation.....beats me too

    i tot only sell below valuation den only leads to a drop in valuation....

    some say valuation lag 3mths....happy can liao

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    I would say, the cooling measures only worked on HDB resale so far.. but not very much

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    Quote Originally Posted by Squall8888
    I notice a rising valuation as well. I mean, just visit www.hdb.gov.sg and do data analysis yourself. I feel it is going up but others might feel differently (disclaimer first).

    If COV drops but prices rising, you know what I mean. Using COV as a price comparison factor is rubbish. May mislead a few but many will not take that. It is hard to swallow when the hdb that you want to buy is valued 20k higher 2 months later.
    Data as quoted for my previous post here was using HDB data via HDB website and my observation was an increase in selling while at the same time report said COV is droping. Hence, the only conclusion was valuation up!!!

    In my opinipon, it's putting back 10k (drop in COV) into your left pocket while at the same time fishing out more than 10K (increase in resale prices) from your right pocket. Since buyers paying less with cash, they might feel less pinch as compare with increase in resale prices.

    Those folks who invented COV concept are damn clever in my opinion to use COV to play the balancing game with the aids of mainstream medias....

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    Quote Originally Posted by devilplate
    some say drop in COV means lower valuation.....beats me too

    i tot only sell below valuation den only leads to a drop in valuation....

    some say valuation lag 3mths....happy can liao
    Today's COV is effecting tomorrow valuation. Valuation form the basic of selling price. If COV trend downward, HDB selling price will also go down.

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    Quote Originally Posted by westman
    have spoke to some agents and they told me while COV is coming down... they noticed the valuation price goes up!

    Hence a reduction of 10k in COV was cancelled off with increase in valuation. Not sure total impact becos of this.....
    As long as there is COV in a recent sale, the valuation of the neighbouring units will go up. For example, if Mr X sell his flat at $400k (valuation) with $50k COV, his next door neighbour, Mr Y's flat new valuation will the be $450k (there about).Valuation is about determining the current market value, with comparable sales. So if Mr Y sells his at $25k COV, the actual selling price will be $475k. So unless new transactions are below valuation or no COV, the resale flat prices will continue to go up and up. Lower COV now only means the rate of increase has slowed.

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    My sentiments as well. I guess we are looking at trend.

    Quote Originally Posted by Condo Collector
    Today's COV is effecting tomorrow valuation. Valuation form the basic of selling price. If COV trend downward, HDB selling price will also go down.

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    Quote Originally Posted by blackfire
    As long as there is COV in a recent sale, the valuation of the neighbouring units will go up. For example, if Mr X sell his flat at $400k (valuation) with $50k COV, his next door neighbour, Mr Y's flat new valuation will the be $450k (there about).Valuation is about determining the current market value, with comparable sales. So if Mr Y sells his at $25k COV, the actual selling price will be $475k. So unless new transactions are below valuation or no COV, the resale flat prices will continue to go up and up. Lower COV now only means the rate of increase has slowed.
    That is not the way how it work. Mr Y's flat is not going to be valued at 450K. His flat will be valued at higher price but never an increase of previous COV.

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    Quote Originally Posted by Condo Collector
    That is not the way how it work. Mr Y's flat is not going to be valued at 450K. His flat will be valued at higher price but never an increase of previous COV.
    Den how to calculate?

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    my guess based on my own personal calculations is that HDB price will plateau about 50k higher from here.

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    IF one or two quaters later, resale prices still hold or edging up even though COV keep heading south, do you think MBT might unleash new cooling measures?

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    Quote Originally Posted by devilplate
    Den how to calculate?
    HDB valuer will base on few recent transactions around the same area + average selling price published by HDB + condition and floor level to value a flat.

    In HDB valuation, averaging play an important factor.

    As for private, recent transaction has more weight if not 100%.

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    Quote Originally Posted by westman
    IF one or two quaters later, resale prices still hold or edging up even though COV keep heading south, do you think MBT might unleash new cooling measures?

    How to hold price if the COV keep heading south? the nett selling price should come down. The stoppage will be the influx of new citizen and PRs but long term price should appreciate like all others.

    But if what u say really happens, its not going to be good news for existing property owners, especially those with multiple properties. It means more difficult to off load and if at some point there is cash flow issue erm, catastrophic. The fear is that the whole market might cool down suddenly and overnight. There was a mistake made and hope this wont be repeated.

    To build back confidence it requires years of efforts as some could have been burnt so badly and din want to touch property anymore.

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    Quote Originally Posted by Condo Collector
    That is not the way how it work. Mr Y's flat is not going to be valued at 450K. His flat will be valued at higher price but never an increase of previous COV.
    It is just a simplistic example to prove a point. Of course, valuers for HDB are very conservative, they will take into account, whether it is a one off, and taking into account of other recent comparable sales, there is also discount on the renovations, etc. 450k is just there about, and likely lower due to the recent crazy prices. As long as there are COVs, valuation will go up.

    This is in line with govt policy. Take note the govt want to cap the COV but not to reduce resale prices. On contrary, the govt promise the pp hdb flats is an appreciating asset over time, hence don't expect resale prices to come down unless the economy is in recession.

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