Zero-COV transactions for resale flats on the rise

SINGAPORE — Almost as many resale flats were sold without cash over valuation (COV) in July and August, as in the first six months of the year.

According to the Singapore Real Estate Exchange (SRX), there were 111 zero-COV transactions, up from 38 in the first quarter and 77 in the second quarter.

SRX data also showed that four-room flats recorded the biggest number of zero-COV transactions from January to August: 82 cases compared to 67 for three-room flats and 57 for five-room units.

Property analysts said it was a sign that measures such as the total debt-servicing ratio are taking effect.

While SRX did not disclose the number of resale flats sold below valuation, the figure is expected to rise.

“We’ll definitely see (it) in the next two quarters at least ... And when negative COV transaction data adds up, the authorities will be adjusting the value, so valuations will start to go down,” said International Property Advisor CEO Ku Swee Yong.

“Twelve months from today, I believe overall market COV may turn out to be plus-minus zero, but with the value trending down by 5 to 10 per cent.”