HDB to publish daily resale transactions
Cash-Over Valuation or COV will no longer figure in negotiations for resale flats.
Under HDB's revised resale procedures, buyers and sellers will have to agree upon a price first before getting an official valuation.
National Development Minister Khaw Boon Wan says this is to encourage resale flat buyers and sellers to negotiate based on recent transacted prices, just like the practice in the private housing market.
Our News Desk with more.
Speaking in the Parliament during the Committee of Supply debate, National Development Minister Khaw Boon Wan says the common practice of using the valuation report as a base price and negotiate using the COV, is "an anomaly" unique to Singapore.
"Nearly 40% of resale transactions last month were priced below valuation, or a negative COV. Indeed, the market has coined a new term, CUV: cash-under-valuation. Whether it is COV or CUV, the practice of bargaining based on this, rather than the total price of the flat, is an anomaly unique to our HDB resale market."
He says he agrees with MP Lee Bee Wah's suggestion that "the right thing to do" is for the HDB Resale market to follow the practice in the private housing market - especially when COVs are now hitting zero or negative.
So, under the revised HDB Resale Procedures.
Buyers or their housing agents can request a valuation from an "HDB-approved valuer" only AFTER being granted an Option to Purchase or OTP by the seller.
Before the revision, valuations are usually sought by sellers BEFORE granting an OTP.
To help buyers and sellers in this transition, HDB will continue to honour OTPs and valuation reports which were granted before today and have not expired.
HDB's InfoWeb has also started publishing daily updates on resale transactions as soon as they're registered.
Property analysts whom 938LIVE spoke to welcome the move.
Chris International's Director, Chris Koh says the changes will make transactions more transparent.
"Whether the COV is above, the COV is below, we don't need to have that anymore, that means now we'll just have sellers and buyers agreeing on the price, and then seeking financing based on the valuation report. This way the perception to always have a cash component will no longer be there."
Also welcoming the move, ERA Realty's key executive officer, Eugene Lim says, COVs distort the market.
"Distortion means you leverage on valuations which is market value to mark up the value. Then when you mark up the value and the price is transacted at the marked up value, that becomes a transacted price. And it will then be reflected in the next valuation. So each time when valuation increases, the COV you add it on, the transaction prices become higher and it's like a cat trying to catch its tail, it will keep on spiralling."
-By Lee Gim Siong and Lim Jia Qi.
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