Proportion of Resale HDB Flats Transacted with Cash-Over-Valuation (COV) and Quantum of COVs

2 Mr Xie Yao Quan asked the Minister for National Development (a) what proportion of resale HDB flat buyers paid Cash-Over-Valuation (COV) since 14 February 2023, when enhancements to the CPF Housing Grant were announced; (b) what is the mean and median COVs since 14 February 2023; and (c) whether the Ministry will consider making the CPF Housing Grant conditional on COVs to keep COVs prudent and sustainable.

The Senior Minister of State for National Development (Mr Tan Kiat How) (for the Minister for National Development): On 14 Februay 2023, Deputy Prime Minister Lawrence Wong announced that the Central Provident Fund (CPF) Housing Grant would be increased to provide more support for First-Timer Singaporeans seeking a resale flat. Eligible First-Timer families buying a 2-room to 4-room resale flat can receive $80,000 in CPF Housing Grant, up from $50,000 previously, while those buying a 5-room or larger resale flat can receive $50,000 in CPF Housing Grant, up from $40,000 previously. Eligible First-Timer singles buying a 2-room to 4-room resale flat can similarly receive an increased CPF Housing Grant of $40,000, up from $25,000 previously; while those buying a 5-room resale flat can receive $25,000, up from $20,000 previously.

Housing and Development Board (HDB) resale flat transactions are conducted on a "willing buyer-willing seller" basis, with prices negotiated and mutually agreed upon between flat sellers and buyers. Cash-Over-Valuation (COV) arises when the resale price is higher than the market valuation of the flat.

After the CPF Housing Grant was enhanced in February 2023, about 18% resale flat buyers paid COV. This is a noticeable reduction from about 29% in 2022 and 36% in 2021. The majority of resale flat buyers did not have to pay any COV and the median COV across all buyers has remained at $0.

The CPF Housing Grant is targeted at first-timer buyers who meet income criteria and other eligibility conditions, limiting its impact on the overall resale market. COV restrictions would be challenging to enforce, as buyers and sellers could collude to circumvent the restrictions. The Government will continue to keep a close watch on the affordability of flats on the resale market.

Mr Speaker: Mr Xie.

Mr Xie Yao Quan (Jurong): Thank you, Speaker. I thank the Senior Minister of State for his reply. I am glad to hear that the COV situation has calmed down in the last three years. I think it is especially important for COV to remain low and stable, especially for first-timers who are buying resale flats. So, in this respect, I just want to ask the Senior Minister of State whether the Ministry will be minded to consider a tiered system of haircuts to the CPF Housing Grant, pegged to different amounts of COV, to promote prudence in the determination of COV between buyer and seller.

Mr Tan Kiat How: Sir, I thank the Member for his supplementary question. Basically, he is asking, can we give less CPF Housing Grant if less COV is paid and perhaps even consider vice versa.

As I shared earlier in my main reply, the COV is determined between a willing buyer and a willing seller, and arises when the transacted price is above the valuation. Because it is a willing buyer-willing seller agreement, there is a high chance of it being hard to enforce because the buyer and seller could collude to circumvent the restrictions. That is the first point.

The second point is, as I said, it is a willing buyer-willing seller agreement. Between the two, there are many considerations at play. Potentially, it could be the attributes of the flat, the location possibly. I have residents telling me, first-timer residents telling me they chose certain locations because of certain needs, for example, caregiving needs to family members living in the same block or nearby.

I think it is sensible to not over-complicate the scheme and overly intervene in such decisions.