The industry body representing Singapore’s property valuers has called for the removal of official data on cash premiums paid, also known as median Cash-Over-Valuation (COV), for Housing and Development Board (HDB) resale flats.
COV is the difference the buyer pays in cash between the resale price and the market value of the HDB resale flat.
The Singapore Institute of Surveyors and Valuers (SISV) said in a statement on 31 August that it backs National Development Minister Khaw Boon Wan’s assessment to stop the release of COV data, pushing home buyers to “use market valuations as the basis for making home buying decisions”. It also recommends that authorities “discourage” the practice of paying COV.
According to Lim Lan Yuan, President (valuation and general practice) at SISV, the practice will cause housing prices to rise rapidly, encouraged by “exuberant sentiments ahead of economic fundamentals”.
“As cash-over-valuations arise from specific individual buying decisions and are not necessarily paid in all transactions, they should not be recognised as such in the market. We should discourage the practice of cash over valuations”, SISV said in a statement. It added that buyers and sellers should use actual prices of recent transactions or market valuations when negotiating the price of a HDB resale flat.
It added that if COVs are always paid, the market value of a flat will be affected, thereby pushing prices upwards. And since COVs are required to be paid in cash, a flat’s affordability will also be affected.
The HDB excluded COV data for HDB resale flats from its latest quarterly statistics in July.
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