Cash-Over-Valuation is here to stay, says Minister Khaw

National Development Minister Khaw Boon Wan has reiterated that Cash-Over-Valuation (COV) – the premium that HDB resale flat buyers pay to seller – is here to stay.

Responding to netizens on his Facebook page on National Day, Mr Khaw said abolishing COV and relying on a professional valuer to set the price of resale flats was tried “years ago”. “COV then went underground as ‘under counter cash payment’,” he wrote.

The debate over public housing policy began on Tuesday morning after Mr Khaw posted his National Day greetings. Soon, a netizen suggested Mr Khaw remove COV “for good” since it is “an inflationary” component.

But Mr Khaw pointed out that COV is the difference between price of flat as agreed between buyer and seller and the valuation of the flat given by a professional valuer. Abolishing COV means removing the difference between the price of flat between buyer and seller, he noted.

Last month, the HDB decided it will no longer disclose in its quarterly releases the overall median COV figure nationwide. It has also stopped providing overall median COV figures for different housing estates and flat types. Explaining the decision, Mr Khaw said the data could be misleading because there are many other variables involved.

Mr Khaw also said that while the Government is concerned about rising resale flat prices, the problem will be largely resolved in three to five years, when build-to-order (BTO) flats are ready.

Source : Today – 11 Aug 2011

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