New rules place less focus on COVs

[Jhyy701]

Don't understand this new rule, that the HDB selling price to be based on recent transaction price instead of COV? do they mean that the HDB price will be based on bank valuation only???

 

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To improve the long-term stability of the public housing market and encourage buyers and sellers to focus on the sum total of a flat's price, price negotiations for HDB resale flats will now be based on recent transaction prices instead of Cash-Over-Valuation (COV) figures.

This according to an MND facebook post summarising National Development Minister Khaw Boon Wan’s speech in Parliament this afternoon.

As of 5pm today, HDB will only accept valuation requests from resale flat buyers or their appointed salesperson, after buyers have been granted an Option to Purchase (OTP) by the sellers.

Under the new rules, buyers who are granted OTP will have 21 calendar days, instead of 14 days to exercise the OTP to adjust to the new procedure.

In addition, HDB will publish daily prices of resale transactions as and when they are registered, instead of fortnightly after the transactions are approved.

Responding, Mohamed Ismail, CEO of PropNex Realty, said: “Using valuation and negotiating based on COVs has been a long-standing practice for the sale and purchase of HDB resale flats. With this revised procedure, the possible impact of allowing valuation only after the OTP is granted, will expose HDB home buyers to a higher vulnerability of a greater cash outlay if there is any gap between the agreed price and the valuation price. Buyers will become more cautious in their offer price as they enter into a purchase without an indication of how much the property is worth. In comparison, for the purchase of a private property, buyers do get an indicative valuation from the banker before entering into an option and in most instances, banks do honour the valuation based on indicative prices given.

“This new procedure will take some time to adjust as the market moves away from the use of COV as the yardstick in negotiations. In those estates where the COVs are still holding high, especially in central locations like Redhill, Bishan or Toa Payoh, buyers and sellers are likely to continue to rely on the valuation of other sources for their price negotiations as such information are still going to be made available by property portals and other platforms,” added Ismail.

He noted that HDB resale prices are expected to drop further as potential buyers take a cautious approach in their negotiations before they ink the OTP.

For the first time after an eight year period, HDB resale prices saw negative growth of 0.6 percent in 2013. Ismail expects this trend to continue, with prices expected to fall by five to eight percent this year.

 

http://www.propertyguru.com.sg/property-management-news/2014/3/37469/new-rules-place-less-focus-on-covs

[Vid]

Already here http://www.mycarforum.com/topic/2693544-agree-price-then-get-valuation/