There are many good reasons to sell your home – you’ve outgrown your current flat and want to get something bigger, you’re migrating to another country, or you might be downgrading because your children have already married and moved out.

Regardless of your reason for selling your flat, here are several important factors to look out for:

When Cash-Over-Valuation (COV) Levels Fall

The Cash-Over-Valuation (COV) is the amount of upfront cash a buyer pays above the value of your flat. The COV is important because it gives you a large amount of cash to use towards the purchase of your new home – whether you want to use it towards the down payment or renovations.

The other reason COV is important is because much of its “value” comes from your flat’s capital appreciation. This means all of the money you put into improving your flat through renovation and refitting will be reflected.

But with COV levels at a nearly 3-year low, that $50,000 COV you could’ve commanded a few years back is now about $10,000 if you’re lucky. So if you sell now, be prepared for your COV to take a hit.

When It Gets Tougher to Receive Financing

The latest MAS cooling measures saddled borrowers with a more restrictive Mortgage Servicing Ratio (MSR) of 35% and a Total Debt Servicing Ratio (TDSR) of 60%. Further limiting how much money home buyers can borrow from the banks.

This leads to several key problems:

• You may not be able to sell your home because buyers won’t be able to borrow enough to meet your asking price.

• You may be forced to lower your selling price to meet a buyer’s lower borrowing ability if you need to sell your home in a hurry.

• You may not be able to upgrade to a bigger flat because your ability to borrow enough to buy it will also be affected.

When a Flood of Newly Built Flats Lowers Demand

With HDB launching thousands of new Build-to-Order (BTO) flats in the near future, it’s likely that these new flats will cool the resale market. That means you can expect COVs to drop even further. But that doesn’t mean resale prices won’t go up again.

The demand for resale flats should grow in the future as the number of foreigners and PRs grows, and BTO flats for singles remains limited.

With these factors in mind, it might be best to hold onto your flat for a while longer until resale values go back up in the future.