By Olivia Siong | POSTED: 09 Jan 2014 10:43 | UPDATED: 09 Jan 2014 23:21 | CNA

SINGAPORE: According to flash estimates released by the Singapore Real Estate Exchange (SRX), Cash-Over-Valuation (COV) for HDB resale flats fell to S$5,000 in December 2013, the lowest since June 2009.

The median HDB valuation price also fell for the first time since the global financial crisis in the fourth quarter of 2013

Goo Shao Chun, 36, was waiting to sell his five-room HDB flat in Woodlands and hoping to upgrade.

When he noticed COVs falling, he decided to sell and bought an HDB executive apartment in October with a S$15,000 COV, even if it meant settling for a lower COV.

Mr Goo said: “COV for this unit I’m actually selling is S$17,000; back then I think it can fetch easily S$30-35,000. I think the first thing that’s going to impact is the renovation for my new house because the COV I’m getting is actually lower.

“When I already know that the COV is going to be reduced, I’m looking for a unit that suits this decor design and idea so that I can fork out less when it comes to renovation.”

According to SRX data, the median COV for a five-room HDB flat was negative S$4,500 in December.

Median COV in 2013 fell from a peak of S$35,000 in January to S$8,000 in November and to S$5,000 in December, registering a 37.5 per cent drop month-on-month.

About 20.2 per cent of all HDB resale flats were also sold below valuation, up from about 13 per cent in November and 0.6 per cent at the beginning of the year.

Towns such as Punggol, Sengkang and Woodlands saw the highest proportion of such sales.

Punggol (57.9 per cent) and Sengkang (57.1 per cent) saw more than half the deals closed below valuation.

About 40 per cent of transactions in Woodlands also had negative COV.

44-year-old Ismail Ariffin, however, is not complaining. He paid S$20,000 below valuation for his flat in Yishun in November.

Mr Ismail Ariffin said: “I tried to go for BTO — I’ve been trying a number of times and can’t succeed. I’ve been thinking if I get BTO, I need to get rental flat. Then (for) rental flat, I need to fork out cash, you see?

“I can’t wait. (The only way is)… to go for open market, which if zero (or) negative (COV), I can afford it. If with COV, maybe I need to think (about it).”

For the first time since the global financial crisis in 2009, quarterly overall median HDB valuation fell from Q3 to Q4 last year, down S$3,000 to settle at S$435,000.

Jeremy Lee, co-founder of SRX, said: “In a case of a dropping Cash-Over-Valuation, it’s a double whammy when the valuations come down, so sellers must seriously manage their expectations.

“Certainly this is normalising; in my opinion, it’s definitely not going for any kind of hard landing. It’s an engineered soft-landing in terms of having more moderate price expectations in the market.”

Some property analysts expect COVs to continue to fall and more deals to be transacted at or below valuation in the coming months, and they say this may have an impact on the demand in the private property market.

Eugene Lim, key executive officer of ERA Realty Network, said: “Resale HDB volume has fallen by some 20 to 30 per cent, so you can expect a similar reduction in the number of buyers that are upgrading into the private residential market.”

At 908, total HDB resale transactions in December were also the lowest since February.

– CNA/nd/gn