Tag Archives: COV

COV is here to stay, says Khaw

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Aug 11, 2011 – PropertyGuru.com.sg

National Development Minister Khaw Boon Wan has clearly stated that he cannot abolish the cash premiums that HDB resale flat buyers must pay to sellers.

His announcement came as a reply to comments posted on his Facebook page on National Day. He explained that the Cash-Over-Valuation (COV) premiums are set by buyers and sellers themselves and thus, cannot be removed.

He added that removing the COV and having a professional valuer determine the price of resale flats was tried “years ago”. As a result, the “COV then went underground as ‘under counter cash payment’,” he wrote.

The debate over this policy started when Mr. Khaw posted his National Day message, after which comments trickled in, suggesting that the COV be removed as it is an “inflationary” factor.

He explained that the COV is the difference between the valuation of the flat provided by a professional valuer and the price agreed on between the seller and the buyer.

In July, the HDB announced that the nationwide overall median COV figure will no longer be included in its quarterly releases. Furthermore, it has also ceased publication of the overall median COV numbers for various flat types and housing estates. He noted that the data could be misinterpreted as there are other variables involved.

With regards to rising resale flat prices, he said the government has taken notice but the problem will be resolved in three to five years time, when Build-to-Order (BTO) flats are ready.

To contact the journalist, you may send your message to editor@propertyguru.com.sg

Property cooling measures taking effect, says PropNex CEO

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Jul 4, 2011 – PropertyGuru.com.sg
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The government’s anti-speculative measures are now taking effect in the property market, as the Housing and Development Board’s (HDB) Resale Price Index (RPI) edged up 2.9 percent to 179.9 in the second quarter, up from the 1.6 percent increase over the same period last year.

“Buyers who took 1Q11 to understand the cooling measures announced on 13 January 2011, especially the lower 60 percent Loan-To-Value ratio and revised Minimum Occupation Periods, have come back to buy on the resale market,” said Mohamed Ismail, Chief Executive of PropNex.

“However, there are still many owners who, due to the cooling measures, are reluctant to move or sell their flat, resulting in a supply crunch and driving median resale prices as well as COV levels up.”

While average resale prices rose 2.6 percent quarter-on-quarter to 5.3 percent in the second quarter across various types of flats, the higher-than-anticipated two to three percent increase in median cash-over-valuation (COV) levels surged by 40 to 50 percent quarter-on-quarter, to hit an overall S$32,000 for the second quarter of 2011.

“Although the current levels of S$28,000 to S$45,000 COV are not sustainable in the long run, I expect the momentum of the increase to see overall median COV reaching around S$35,000 in 3Q11, before dropping back to an overall median COV of around S$32,000 for 4Q11,” noted Ismail.

He said that one reason would be that the introduction of even more new flats, comprising Build-to-Order (BTO), Design, Build & Sell Scheme (DBSS) and Executive Condominiums (EC), will have a cooling effect on the resale market as more young couples turn from resale flats with high COVs to a wider range of new flats at lower prices.

“Another reason would be the launch of more mass market projects in the next two quarters, alleviating some of the demand on the HDB resale market, especially for the larger flats in pricier estates,” he said.

“We can even expect to see COV levels continue to decline further into 2012 if the government continues to provide new supplies of public housing at the current brisk rate.”

However, Ismail was cautious about linking the current price movements to Minister Khaw’s recent policy changes, as it is still too early for those announcements to have had any noticeable effect.

Meanwhile, HDB said it is on track to offer BTO flats by September this year, as well as launch another 3,000 BTO flats in the fourth quarter.

“To further enhance the supply for 3rd Quarter 2011, HDB plans to launch 2,000 flats under a Sale of Balance Flats Exercise scheduled in Aug 2011. This exercise will offer some flats in the mature estates,” said HDB, adding that “information about the locations and flat types will be made available at the point of launch.”

To contact the journalist, you may send your message to editor@propertyguru.com.sg