Cov - Where Is It Heading?

[doraemon88 0]

I've benefitted a lot from this forum, just want to contribute my two cents...

This is just my opinion.

I've been looking for a resale flat since six months ago.

In end Sep, I viewed a flat which I liked very much. I made an offer of 62K

two days after viewing. I thought the COV was reasonable (last offer was 60K).

However, I was told it was already optioned. My wife and I both felt it was a pity

as we missed a flat that we like and the COV was reasonable.

This location/cluster that we are aiming commands a higher COV as it is very near MRT.

Previously(before 30 Aug) we made two offers of 70K for similar units but were rejected.

As I am actively looking for house myself, I can see COVs coming down quite a bit. In fact, for the

past two weeks, there were other units with last offers of only 35K++ . (I am comparing units of same location

and similar size). So it could be a blessing in disguise that I missed the opportunity to purchase the flat

in end Sep. If not, I could have overpaid a lot.

Well, I don't know but it seemed to me that COVs have come down quite a bit and this is probably

just the beginning.

I am no guru to give any advice, just want to caution buyers that they should observe the COV trend

closely during this period as agents may not warn them of the market conditions. As for me, I'm willing

to wait patiently for COVs to come down.

Above is just my experience and opinion. Pls do not hold me responsible for your decisions.

[Jgal 0]

As I am actively looking for house myself, I can see COVs coming down quite a bit. In fact, for the

past two weeks, there were other units with last offers of only 35K++ . (I am comparing units of same location

and similar size). So it could be a blessing in disguise that I missed the opportunity to purchase the flat

in end Sep. If not, I could have overpaid a lot.

Sorry. Just checking . did you overpaid in term of COV or in term of the full amt paid for the flats? The way i see it , prices continue to climb..

2 mths ago a flat similiar to mine sold for $638k , 80k cov.. Last mth, another unit was sold at $680k with only 50k cov..

But again, the guy that bought 2mths ago saved cos' he paid 638k..

I dun see how you could have overpaid earlier and save now ?

[forgotten 1]

The COV now may be less than that months ago but the valuation price now may also be higher than that month ago. I think a buyer has to consider the total sale price (Valuation + COV) instead of just the COV.

Of course, first time buyers will prefer to pay less COV so that they have more cash for their renovations.

Edited November 2, 2010 by forgotten

[gimz63251073 0]

The COV now may be less than that months ago but the valuation price now may also be higher than that month ago. I think a buyer has to consider the total sale price (Valuation + COV) instead of just the COV.

[forgotten 1]

The results of HDB August's Balance of Sale Flats was announced a few days back. Some of its 20,000 applicants, who fail to get a good ballot number, may decide to look at resale market if they can't afford to wait 4 years for the BTO flats. Let's see how the demand vs supply curve goes for next quarter.

Edited November 2, 2010 by forgotten

[doraemon88 0]

Hi ,

Jgal and forgotten pointed out important considerations besides COV. Thanks.

I am referring to COVs only.

As for valuations, I've no idea. I did noticed valuations are still high, some (but not all) units are even rising.

My understanding is valuations depends on past transacted prices.

So if COVs come down to a very low level, rises in valuation will also be very slow.

Maybe someone can offer clues on how valuation work and in what circumstances will valuation drop. Thanks.

[forgotten 1]

My understanding is valuations depends on past transacted prices.

So if COVs come down to a very low level, rises in valuation will also be very slow.

My sister is in her final year of her Real Estate Degree course at NUS. Her syllabus touches on HDB valuation and private property valuation.

She told me that valuation prices primarily depend on the past transacted prices of the units nearby our unit.

I think you are right to say that if COVs come down to a very low level, rises in valuation will also be very slow.

Maybe someone can offer clues on how valuation work and in what circumstances will valuation drop. Thanks.

So I think valuation prices will drop if units nearby our unit start selling at below their valuation prices (no COV).

Edited November 2, 2010 by forgotten

[aegis0129 2]

My sister is in her final year of her Real Estate Degree course at NUS. Her syllabus touches on HDB valuation and private property valuation.

She told me that valuation prices primarily depend on the past transacted prices of the units nearby our unit.

I think you are right to say that if COVs come down to a very low level, rises in valuation will also be very slow.

So I think valuation prices will drop if units nearby our unit start selling at below their valuation prices (no COV).

as long as people are paying COV, prices will not come down as valuations are going up. i did manage to negotiate for lower cov from 45k-35k

when the last offer was 38k made one mth+ ago. now if you havent bought its a waiting game. bottomline is live within your means...

[Sam Lee Poh Huat 0]

But again, I think our horse did something right this time rd to put some brakes on this escalating COV. Right to mention that low interest wont last forever. Currently, guess some of us here might already overstretch themselves to 35-40% of gross nett income on housing. And this will further add on stress on families who r not prepare for a raising interest rate of.. say.. 5% for the next few years. At the same time, it will be not advisable to agonise most owners with drastical drop in prices and therefore, high valuation with low/zero COV shld be able to pacify both camps.

[Roflmaoxz 0]

No wonder my frd got problem in selling his 2 AMK 3rm resale HDB. Initially asking 30k COV, now reduce to 10k COV also no ppl come for viewing.

Due to the recent new BTO launches and more to come, I guess more potential buyers all adopt a wait-and-see tactic. But this doesn't mean that the resale prices will drop drastically. Valuation will continue to go up, but COV to soften and drop abit. Buyers will have "more say" during the negotiation. Overall the sellers still can earn some profits, depending whether they satisfied with low/no COV or not.

[neubie 2]

No wonder my frd got problem in selling his 2 AMK 3rm resale HDB. Initially asking 30k COV, now reduce to 10k COV also no ppl come for viewing.

Due to the recent new BTO launches and more to come, I guess more potential buyers all adopt a wait-and-see tactic. But this doesn't mean that the resale prices will drop drastically. Valuation will continue to go up, but COV to soften and drop abit. Buyers will have "more say" during the negotiation. Overall the sellers still can earn some profits, depending whether they satisfied with low/no COV or not.

i would tinkg even 30k is not the intrinsic COV of a 3rm flat in AMK, much less 10k...more of a issue of 有价无市...

Edited November 3, 2010 by neubie

[aegis0129 2]

But again, I think our horse did something right this time rd to put some brakes on this escalating COV. Right to mention that low interest wont last forever. Currently, guess some of us here might already overstretch themselves to 35-40% of gross nett income on housing. And this will further add on stress on families who r not prepare for a raising interest rate of.. say.. 5% for the next few years. At the same time, it will be not advisable to agonise most owners with drastical drop in prices and therefore, high valuation with low/zero COV shld be able to pacify both camps.

When you buy a house for own use make sure you can take interest hikes, the current rates are obviously not going to be here forever. At the very least make sure you can take it when it's 3-3.5% which is nearer to historical norms.

[aegis0129 2]

i would tinkg even 30k is not the intrinsic COV of a 3rm flat in AMK, much less 10k...more of a issue of 有价无市...

What to do, mkt let people fry until nothing left.

[Warrior88 0]

When you buy a house for own use make sure you can take interest hikes, the current rates are obviously not going to be here forever. At the very least make sure you can take it when it's 3-3.5% which is nearer to historical norms.

Just to add on, If interest rate up by 2%, monthly installment up by few times this rate.

The longer the tenure, the monthly installment up % is even higher.

[Sam Lee Poh Huat 0]

Just to add on, If interest rate up by 2%, monthly installment up by few times this rate.

The longer the tenure, the monthly installment up % is even higher.

Prob for most pple on buying spree nv even realise whats their housing budget and not to mention their limit on raising interest rate. Take a dip on PM latest interview with reuters, more measure if prices cont to raise after this wait and see period.