It has been said that private home markets have dived. A check with the URA website (below: Condo recent transacted price) under "Transactions with Caveats Lodge" reveal that most central area condos have not only not dived but have mantained a strong sales price. A look at the other spectrum: the HDB resale market which equally reveals an active market and strong price. This is indeed surprising.
This strength proves our strong underlying fundamentals. But it is doubtful it will continue.
There are signs that this segment will not be immune to the economic slowdown. While prices have not dropped, the cash component that buyers typically forked out called "the cash over valuation" price has fallen dramatically. This COV, is usually a must in most transactions. Now that the HDB market outlook is less upbeat, some deals will be done at market valuations. This means that no COV is required. News of stock market falling and sub-prime fallout must mean that sellers have lowered their expectations. Most COVs now range from $5000 to $30,000 for selected areas. It is to be noted that COVs of $5000 were unheard of, in the not too distant past, before the sub-prime issue became a BIG problem. Now there are ads asking for zero cash -typically ads featuring old flats. Demand remains strong as there are newly weds and permanent residents looking for HDB flats. It is to be noted that sales volume actually shot up by 57 percent during the Asian Financial Crisis, when most companies opted for retrenchment exercise.
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