Recent data suggests that the market is gradually stabilizing, leading to a significant decrease in the proportion of buyers paying COV to purchase resale public housing units. This phenomenon is mainly attributed to the gradual balance of supply and demand and efforts by the government and the construction industry to increase project supply.

According to the latest data, in the fourth quarter of 2023, approximately 15% of resale public housing buyers paid COV, compared to nearly 30% in the fourth quarter of 2022, indicating a significant downward trend.

Minister for National Development Lawrence Wong emphasized this trend at a seminar on the outlook for the construction and real estate industry, noting that most resale public housing buyers did not pay COV, and the median COV paid by buyers remained stable at around SGD 30,000.

COV refers to the amount that buyers are willing to pay above the professionally assessed value to secure their desired unit. As the real estate market gradually recovers, the proportion of buyers not needing to pay COV is increasing, reflecting a trend of gradual balance in market supply and demand.

The government and the construction industry have taken a series of measures to address the impact of the COVID-19 pandemic on the market and increase the supply of Build-To-Order (BTO) flats and private residences, helping alleviate market imbalance. These efforts include raising Additional Buyer's Stamp Duty (ABSD) and other measures aimed at stimulating market activity and increasing housing supply.

Data shows that the rate of price growth for resale public housing has slowed down, decreasing from 10.4% the previous year to 4.8% last year. Transaction volumes for both private residences and public housing have also declined, with volumes decreasing by approximately 13% and 4%, respectively.

Buyers have become more sensitive to prices, and more resale public housing units are being sold at their professionally assessed values without paying COV. This has compelled sellers to slightly lower their asking prices, with buyers choosing to purchase units at levels close to recent transaction prices, influencing market pricing.

However, owners of million-dollar apartments in prime locations continue to demand high prices, with some even raising their asking prices further. Due to the impending restrictions of the upcoming Optimal Site and Unit Selection (OSUS) model, buyers are more inclined to purchase resale public housing, allowing sellers to price confidently.

Experts anticipate that inflation, rising interest rates, and economic uncertainty will make buyers more cautious. While the quantity of public housing units meeting the Minimum Occupation Period (MOP) and eligible for resale is expected to decrease, the government is accelerating the construction of BTO flats to provide more choices for buyers. Therefore, they believe that COV levels will remain relatively stable.

Additionally, the decrease in COV has increased the attractiveness of resale public housing. Those originally planning to upgrade from public housing to private condominiums may reconsider, leading to a reduction in demand for private condominiums. Reduced demand implies that sellers of private condominiums must lower their asking prices, resulting in a slowdown in the resale price growth of private condominiums.