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17-03-14, 14:12
http://www.straitstimes.com/archive/tuesday/premium/top-the-news/story/deals-not-decided-cov-under-new-hdb-resale-rules-20140311
Deals not decided on COV under new HDB resale rules
Published on Mar 11, 2014
By Janice Heng
CASH over valuation (COV) will take a back seat in Housing Board resale deals, as buyers and sellers must now agree on a price before seeking an official valuation.
This is in line with the private market, where negotiations are "rightly" based on recent transaction prices, said National Development Minister Khaw Boon Wan yesterday.
Previously, HDB resale sellers usually sought a valuation, then negotiated with buyers over how much more - or less - to pay.
These cash premiums or COVs caused unhappiness when they hit record highs, with the median COV peaking at $38,000 in mid- 2011. Some units fetched six-figure premiums.
But they have since fallen. The median COV hit zero last month, and more deals have been closing below valuation.
The cooling resale market makes this a good time for change, said Government Parliamentary Committee for National Development chairman Lee Bee Wah (Nee Soon GRC) yesterday. Mr Khaw agreed.
Now, a price must be agreed upon and the Option To Purchase (OTP) granted, before a buyer can get a valuation from the HDB. This will "restore the original intention of valuation, which is to help buyers get a housing loan", said Mr Khaw.
The change kicked in at 5pm yesterday. Sellers can no longer get valuations from the HDB.
But existing OTPs and valuations will be honoured. Buyers will also get 21 calendar days to exercise the OTP, up from 14 before.
HDB has also started publishing daily figures on resale transactions rather than fortnightly, as was previously the case.
"Negotiating on price rather than COV will take some getting used to," said Mr Khaw. "However, it is a useful move for long-term market stability."
Experts are optimistic that it will achieve this aim. Said PropNex CEO Mohamed Ismail Gafoor: "If people can come to terms with the new norm... I think we can have more sustainable growth and not unrealistic price rises."
The change came on the back of a cooler market, dampened by measures like home loan curbs and a higher supply of new flats.
Views differ on whether cooling measures should stay, noted Mr Khaw, but his take is that the market is not yet at the optimal state. "With prices still rising, though tepidly, in some market segments, it is premature to withdraw these measures."
The ministry will also listen to the people, with engagement exercises this year similar to Our Singapore Conversation.
Said Mr Khaw: "I intend to further engage Singaporeans on the relationships and values we hold dear as a society, and how housing policies can better support them."
[email protected]
Deals not decided on COV under new HDB resale rules
Published on Mar 11, 2014
By Janice Heng
CASH over valuation (COV) will take a back seat in Housing Board resale deals, as buyers and sellers must now agree on a price before seeking an official valuation.
This is in line with the private market, where negotiations are "rightly" based on recent transaction prices, said National Development Minister Khaw Boon Wan yesterday.
Previously, HDB resale sellers usually sought a valuation, then negotiated with buyers over how much more - or less - to pay.
These cash premiums or COVs caused unhappiness when they hit record highs, with the median COV peaking at $38,000 in mid- 2011. Some units fetched six-figure premiums.
But they have since fallen. The median COV hit zero last month, and more deals have been closing below valuation.
The cooling resale market makes this a good time for change, said Government Parliamentary Committee for National Development chairman Lee Bee Wah (Nee Soon GRC) yesterday. Mr Khaw agreed.
Now, a price must be agreed upon and the Option To Purchase (OTP) granted, before a buyer can get a valuation from the HDB. This will "restore the original intention of valuation, which is to help buyers get a housing loan", said Mr Khaw.
The change kicked in at 5pm yesterday. Sellers can no longer get valuations from the HDB.
But existing OTPs and valuations will be honoured. Buyers will also get 21 calendar days to exercise the OTP, up from 14 before.
HDB has also started publishing daily figures on resale transactions rather than fortnightly, as was previously the case.
"Negotiating on price rather than COV will take some getting used to," said Mr Khaw. "However, it is a useful move for long-term market stability."
Experts are optimistic that it will achieve this aim. Said PropNex CEO Mohamed Ismail Gafoor: "If people can come to terms with the new norm... I think we can have more sustainable growth and not unrealistic price rises."
The change came on the back of a cooler market, dampened by measures like home loan curbs and a higher supply of new flats.
Views differ on whether cooling measures should stay, noted Mr Khaw, but his take is that the market is not yet at the optimal state. "With prices still rising, though tepidly, in some market segments, it is premature to withdraw these measures."
The ministry will also listen to the people, with engagement exercises this year similar to Our Singapore Conversation.
Said Mr Khaw: "I intend to further engage Singaporeans on the relationships and values we hold dear as a society, and how housing policies can better support them."
[email protected]