Charissa Yong | The Straits Times | Sunday, Jun 02, 2013

LOWER the prices of resale flats or at the very least maintain them – that was the wish of most participants at an Our Singapore Conversation session on affordable housing this week.

Only a handful of the 50 attending Wednesday night’s session were in favour of letting resale prices rise gradually to keep pace with inflation.

Scrapping the cash-over-valuation (COV) premium was one of the most popular ideas on how to bring prices down. The COV is a cash amount above a resale Housing Board flat’s valuation. It is negotiated by sellers and buyers and paid by the latter.

Civil servant Fiona Tan, 42, said: “I don’t understand why COVs are necessary, since a flat’s value would have been determined by the valuer.

“These premiums stress buyers out, especially for singles who have just one income stream. I just want a roof over my head and hope that one day it becomes an affordable dream for us, like it was for my parents’ generation.”

But others were quick to defend the COV’s role.

“It’s market forces. There must be something to differentiate between units,” said Mr Sonny Wee, 37. The service manager said it was the valuation of a flat, rather than the COV in itself, which drove up resale prices.

Some also pointed out that even if COVs were banned, they would still be likely to go on “under the table”.

Teacher Sean McMenamin, 28, said that although he was against the idea of a COV, some sellers did need the cash for valid reasons such as renovation costs.

During the three-hour session, home owners and buyers debated different ways to make resale and Build-To-Order (BTO) flats more affordable.

Almost all rejected selling flats back to the Government, especially at purchase price, instead of on the open market.

“There’s no incentive for owning a flat (if you can’t sell it to someone else). It’s basically a rental,” said Mr McMenamin.

He added that his discussion group was against the idea because it would hinder asset appreciation and social mobility.

Property agent Elaine Goi, 48, said selling a flat back to HDB without accounting for inflation would cause its value to depreciate, hurting many people whose only asset was their home.

The idea of safeguarding part of resale flat proceeds for retirement needs was also shot down.

Several spoke of how they did not want even more of their money to be “locked away in Central Provident Fund accounts”.

Providing larger housing subsidies for first-time buyers, to be partially returned to the Government upon the flat’s sale, was another idea favoured by several.

Subsidies are currently tiered according to income. BTO buyers can get up to $60,000 if they earn below $1,500 a month. Those earning between $4,501 and $5,000 get $5,000.

charyong@sph.com.sg

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