The Case of the Falling COV: A Step towards Affordability?

Recent findings released by the Singapore Real Estate Exchange (SRX) drew much attention to Cash-Over-Valuation (COV) premiums for Housing and Development Board (HDB) resale flats, with reports stating that overall COVs across all HDB property types have been experiencing a declining trend. In fact, this downward spiral has been said to be so persistent that by the start of September 2013, COVs are said to have fallen to a 4 year low.

In a country where property continues to stir public debate, it is hardly surprising that word about falling COV prices would spread into daily conversations. After all, COVs are by nature often deemed to be an unfair negotiation tactic employed by property sellers for a quick profit, causing much furore amongst those wishing to purchase their first home or to upgrade.

Sentiments towards COVs worsened when news broke of a number of resale flats with COVs exceeding $100,000 were transacted, resulting in many clamouring for the government to take action, with the more vocal ones demanding for the system  to be scrapped altogether. Such reactions against the payment of what most define to be “ridiculously high” costs on top of a HDB unit’s market valuation put into the spotlight recurring concerns of public housing affordability, acutely felt by young couples and families trying to find a suitable place to call home.


Such is the case in Toa Payoh. Long considered to be one of the early bastions of affordable public housing in Singapore since the1960s, today it has earned the reputation of being one of the most expensive districts to buy into with a number of flats commanding COV values over $100,000. For the buyer, this translates to him having to fork out almost or more than 2 ½ times more cash upfront to purchase a same-sized flat which he can find cheaper elsewhere. An even more startling fact is that in comparison to other fluctuating indices such as the Certificate of Entitlements (COEs) for cars, COVs for these choice units in Toa Payoh consistently rank ahead (given that COEs for all car categories are between $66,000 and $83,000 in Q2 2013).

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