http://www.straitstimes.com/Singapor...ry_708172.html

Published on Sep 1, 2011

Valuers call for COV data to be dropped

By Jessica Cheam


THE body representing Singapore's property valuers has called for the removal of all official data on cash premiums paid for Housing Board resale flats.

The Singapore Institute of Surveyors and Valuers (SISV) said in a statement yesterday that it supported National Development Minister Khaw Boon Wan's decision to cease the release of data on cash over valuation (COV), and urged home buyers instead to 'use market valuations as the basis for making home-buying decisions'.

The COV is the amount a buyer pays over and above the valuation of an HDB resale flat. As it must be paid in cash, it has a significant impact on affordability and is used as a barometer of demand in the housing market.

The HDB, in its latest official quarterly statistics in July, ceased issuing data on overall COV paid for HDB resale flats.

Mr Khaw later told reporters that the figures could be misleading, so he took a 'middle way' - by issuing median COV data by HDB towns and flat types, but with no overall figures.

'I think you overdo things by doing a simple averaging and declaring to the world that it's up or down. I think that's misleading the readers,' he had said.

SISV president of valuation and general practice Lim Lan Yuan yesterday noted that when the Government first published COV data in 2007, its aim was to reassure buyers that the high COVs reported in the news were not the norm.

But today, such figures are being used by sellers as a basis for asking for cash as a right in resale transactions, he said.

He added that professional valuers would have taken market conditions into consideration when determining the value of a flat - the COV should thus not be included in the price of a home.

He acknowledged that 'overly anxious buyers' may feel pressured to pay a premium to clinch a deal, but this amount paid 'under specific conditions' which does not fall within the definition of market value of a home should not be reported at all.

'Publishing such data may inadvertently endorse the practice of COV,' he said.

Mr Khaw previously said he cannot abolish COV as this is determined on a 'willing buyer, willing seller' basis and that banning it would lead to illegal, undeclared cash payments.

ERA Realty key executive Eugene Lim said sellers and buyers negotiate 'with an irrational mindset' on COV these days, and not the actual selling price. He had urged the Government to convince buyers to think about the total sale price rather than COV.