Cash-over-Valuation making headline again. Stories of $50K to $100K COV give news organisation added sensations. First, it did not happen. Second, if such transactions do occur, they do not represent the entire HDB Resale activities. Genuine buyers and sellers should not get emotionally excited. Latest Prices is our attempt to aggregate/source actual resale transactions. However success depends on your willingness to share.

Source: Channel News Asia

Housing analysts said it is a sellers’ market right now, with resale flats being a hot commodity lately.

But the Housing and Development Board (HDB) has urged buyers to exercise caution when paying high cash premiums, and to do their homework to determine if a house is truly worth its asking price.

A 4-room flat in Bishan was recently put up for sale. It was valued at S$460,000 by an independent valuer appointed by HDB, and the owners are asking for an additional S$100,000 cash-over-valuation (COV). The owners, who declined to be named, are a young couple in their 30s who run an F&B business. They claimed to have received three offers so far, but all were rejected.

“The COV is too low. There are those who are asking for S$50,000 to S$60,000. There was one offer which was close, about S$95,000. We are not in urgent need to sell. In a way, it’s to test the market. If we sell, we sell. If we don’t sell, we will just continue to stay,” said the owner of the 4-room flat in Bishan. Analysts said with a continued strong demand for resale flats, owners are taking advantage of the situation to increasingly ask for higher prices.

Based on the latest HDB figures, 78 per cent of home sales transacted in the third quarter of last year were above valuation. That is a 22 percentage-point jump from the second quarter of last year’s figure of 57 per cent. The median COV is also on the rise – jumping from S$3,000 in the second quarter to S$12,000 in Q3. With HDB resale flat prices hitting an all-time high, housing agents said most flats now command at least S$20,000 to S$30,000 cash-over-valuation.

Units situated at good locations, close proximity to an MRT station and good renovation can see COV go up to S$50,000 to S$70,000. But there is a limit to how much buyers are willing to pay. “If it’s not to my liking, then I’d have to do up, (renovate) it again. So how much (am I willing to pay)? About S$50 to S$60,000,” said one member of the public.

“It’s too high for me. Because of my income, I don’t think I can afford it,” said another.
HDB said only four out of the 13,000 4-room flats sold last year had premiums higher than S$70,000. Analysts cautioned against jumping into deals that require high cash premiums.

“COV is a premium. Five years down the line, the renovation will deteriorate. And there’s no guarantee that you can sell at S$100,000 above the then value. Therefore, buyers should exercise discretion as far as how high you want to pay,” said Mohamed Ismail, CEO of PropNex.

HDB said it does not control resale flat prices as they are the result of negotiations between willing buyers and sellers. It added that intervening in COV means forcing people to buy and sell at fixed prices. HDB also urge buyers to have the relevant information before negotiating with sellers, and to offer a price within their means.

1. OTP exercise date
2. Valuation
3. Cash-over-Valuation
4. Street Name
5. Block Number
6. Flat Type
7. Estate(e.g. Bedok, Jurong East …)
8. Your Name & Contact number(for verification)

If the deal is nullified subsequently is immaterial, because by exercising the OTP, sellers and buyers transact at an agreed price in consideration of the deposit. It becomes a binding contract, a done deal.

Please provide details through the comment link and we will expand this section accordingly when more information become available through public submission.

THE resale prices of Housing Board flats have risen by 10 to 15 per cent in the past one to two years, despite the recession that began in September last year.

The HDB may have contributed to the spike when it decided to raise the valuation prices of its flats last year, saying it would help buyers as a lower cash-above-valuation payment would result.

The fact is, most buyers still ask for cash-above-valuation payment and the amount does not vary much from that before HDB increased the valuation tag.

When I helped a friend who wanted to buy a flat, the valuation of a four-room HDB flat in Tampines was about $300,000 in 2007 and early last year, with buyers asking for about $30,000 cash. The price was therefore $330,000.

I now hope to buy a resale HDB flat and the valuation of a similar flat is about $350,000 with a demand of about $20,000 cash above valuation.

While the cash request is slightly lower, the valuation price has leapt. The price of a four-room flat in Tampines is about $370,000 now, some $40,000 more than the price early last year – and this is largely due to the higher valuation price.

Instead of helping to stabilise prices, the HDB’s spike in valuation has been instrumental in increasing resale prices.