HDB resale buyers pay less cash or even below valuation now

Buyers of resale HDB flats now tend to need much less cash upfront to secure a home - and those looking at bigger flats may need none at all.

Data released by the HDB showed first-quarter median cash-over-valuation levels fell substantially to $4,000 in the first quarter, from $15,000 in the previous quarter. This refers to the sum that flat buyers pay above a valuation set by HDB-appointed private valuers. Buyers can use Central Provident Fund money for any sum up to this level but need cash for any more.

The significant fall is attributable to twin factors - falling resale flat prices in a deteriorating economy and higher valuation levels, after a run-up in prices over the past year or so before recent falls.

Generally, though valuations are still high, banks are becoming more conservative and there have been cases where buyers are offered only 70 per cent loans instead of the usual 80 per cent. That means more higher-value HDB resale flats are now being sold below valuation - in some cases, perhaps, up to $30,000 to $50,000 below.

ERA's first-quarter resale HDB deals show:
- 21% of flats sold below valuation,
- 19% at valuation.
Of the rest, most fetched no more than $15,000 cash

First-quarter median sublet rents were unchanged for the smaller flats, and down $100 to $200 for the four-room and larger flats. In the first quarter, more people bought smaller three- to four-room flats. Their prices fell a little. The larger flats saw a slightly bigger price fall of up to 2.8 per cent for executive flats.

The good news is that the fall in HDB resale prices is not expected to dent upgrader demand for private homes as the rate at which HDB resale flat prices are falling is still less than that of private homes.

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