Cash Over Valuation - Does It Still Affect You?

By Desmond Ho / Redbrick.sg | November 14, 2018 4:43 PM SGT
Are you looking to sell your HDB flat in the resale market? You may be preparing to welcome a new member to your family, or may have finally saved enough to upgrade to that dream home you always wanted.
On the other hand, you may have spotted your ideal flat in the resale market, and am excited to make an offer for the flat. Before you jump the gun however, there are some features of the Singapore’s resale market we must first consider.
One key feature affecting transactions in the resale market is Cash Over Valuation (COV). In this article, we look at what COV is, and how it would affect your profits or how much you have to pay as a seller or buyer in the resale market.
In Singapore, we have a unique housing environment, where a large majority of us own a HDB flat. Besides buying from the government in the primary market, Singapore also has a secondary resale market as well. In the resale market, buyers and sellers are free to negotiate with one another and decide on the purchase price.
COV is the extra money that buyers have to pay in addition to the market value of the property during resale transactions. When we as buyers decide to pay more for the flat then the market value, we would then need to fork out extra money to pay for COV.
You will probably be wondering, how is market value decided? For HDB flats, the market value will be arrived at by an a HDB panel of independent valuers to ensure fairness.
With this, negotiations between buyers and sellers on COV are removed from the sales process. Sellers thus cannot use COV as a benchmark, and hike up their asking prices above it. Negotiations will instead rightly be based on recent transacted prices as a benchmark.
HDB has also stopped publishing quarterly-median COV prices online. In addition, past records of COV prices have also been removed. HDB instead publishes daily prices of resale transactions and buyers make offers based on the updated figures.
This new rule...