Source : New Paper – 15 Sep 2009
ARE HDB resale prices rising too quickly, a situation worsened by exorbitant cash-over-valuation (COV) requests?
That is the hot topic among many Singaporeans over the past few months, as they find the booming property market pushing flat prices beyond their reach.
Several of them have voiced their grievances in letters to the media, and now netizens have started an online petition urging the Government to do something to curb the rises.
COV rises when buyers are willing to pay more than the market value of the resale flat, which is determined by professional valuers.
This issue was raised in Parliament yesterday when Dr Lim Wee Kiak, MP for Sembawang GRC, raised the question of whether COV was a significant barrier for those buying resale HDB flats.
He asked whether there should be an alternative.
‘Many people are CPF-rich but cash-poor when they want to buy a flat,’ he said.
‘The problem now is, of course, with the open market asking for that price, whether there could be a separate mechanism to look at HDB or private sectors providing a bridging loan for this COV so as to help young couples to overcome that barrier.’
COV not unique
National Development Minister Mah Bow Tan replied that the COV is not unique to HDB flats, and is part and parcel of any property transaction.
He said: ‘Buyers can choose not to pay the COV. And, in fact, the latest data shows that almost one-third of transactions today are transacted at or below the valuation.
‘So, COV is not a foregone conclusion. It is not evident of all transactions.’
He urged flat buyers to not simply cough up COV when sellers or agents ask for it. They should be aware that there are flats available which can be transacted at valuation or below.
And getting a loan for COV will only cause resale prices to go up further, which will not help matters.
He said: ‘In a free market, there must be this interplay between buyer and seller.
‘To expect the Government to ban COV or come in and impose itself in this transaction is not the right thing to do.’
Some netizens, unwilling to let the market find its own solutions, want the Government to lower HDB valuations or build more affordable flats.
Online petition
An ongoing petition, which was started about two weeks ago, had garnered about 400 signatures as of last night.
Netizen Ryan Lai said in the petition that he and his wife-to-be have been trying to buy a resale HDB flat since last year, but have been unable to do so because of high COV on the flats they were interested in.
He said that the average COV for the flats they saw was about $20,000.
‘The reason for trying to buy a resale flat is that we don’t want to wait three to four years for built-to-order (BTO) flats, which we feel is too long,’ said Mr Lai, who is getting married this month.
‘So please make the flats more affordable so that I can start a family. The current price is not affordable at all.’
Another netizen, Mr Lim Chee Keong, lamented that he and his fiancee failed to clinch one of the new Punggol BTO flats for the fourth time.
He said: ‘We also cannot afford the $30,000 COV since we need to reserve the cash for our wedding and any unexpected circumstances.’
The Straits Times last month quoted three property agencies as saying that the median COV has shot up across all flat types, with some units having a COV of above $10,000.
In two recent examples, a five-room flat at Depot Road sold for $70,000 above its $490,000 valuation, while an executive flat in Pasir Ris sold for $35,000 above its valuation of $550,000, according to figures from PropNex and the HSR Property Group.
HDB provides information on recently transacted resale prices and COV on its website to help buyers and sellers make informed decisions.
In July, 31 per cent of resale transactions were conducted with no COV. The median COV level was $7,000, according to HDB.
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