SINGAPORE - Around one in three buyers of a Housing Board resale flat paid above market valuation this year, an increase from one in five last year.
The increase came against the backdrop of steadily rising prices for such flats.
The median cash over valuation (COV) paid by buyers remained at $0 each year, figures released by the Ministry of National Development (MND) as part of a written parliamentary reply last Monday (July 5) showed.
But the proportion of buyers who paid a COV increased, reflecting the current broad-based demand for housing, including in the private housing market, supported by the low interest rate environment, said MND.
COV happens when a resale flat is sold above its actual HDB valuation, and the difference can only be paid for in cash by the buyer.
If buyers and sellers have agreed on a resale price that is equal to the market valuation of the flat, buyers do not have to pay a COV.
From January last year to April this year, fewer than one in four resale flat buyers paid above market valuation for their flat, said MND in another written parliamentary reply last Tuesday.
Among these, about six in 10 buyers paid a COV of not more than $20,000, while the remaining four paid more than $20,000, data from MND showed.
In the 16-month period, about 34,600 resale flats changed hands, said Ms Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, citing HDB data.
This translated to about 8,600 buyers who paid a COV, and among these, around 3,400 paid more than $20,000 COV, Ms Sun added.
"Whether $20,000 COV is high or low depends on the base price. For a $1 million flat, maybe it's reasonable. For a $300,000 flat, it's quite substantial. We need more detailed data to properly gauge if the COV is considered high and how many people are impacted," she said.
Mr Alan Cheong, head of research and consultancy at real estate firm Savills, concurs that more data on COV is needed to paint a full and accurate picture.
For instance, the number of buyers who paid a COV may drastically increase if the time frame started from the third quarter of last year instead of the first quarter, he noted.
This is because the resale market was "still sleeping" in January last year, and resale prices started "accelerating" only in the third quarter of last year, when Singapore came out of a two-month circuit breaker period in June 2020, said Mr Cheong.
HDB stopped publishing data on COV after 2013.
MND noted that HDB resale transactions are conducted on a "willing-buyer, willing-seller" basis, with prices negotiated and mutually agreed on between both parties.
https://www.straitstimes.com/singap...ash-over-valuation-this-year-jump-from-1-in-5
