ONE in three properties sold here change hands without cash over valuation (COV) - they are sold at, or below, their market value.

National Development MinisterMah Bow Tan cited this to show that not all buyers have to cough up a huge amount of cash upfront for a resale flat.

He said that the Government could not intervene by banning the COV or providing loans for COV to home buyers, because it would interfere with the market and distort prices.

'Because the moment you provide a loan for the COV, you are actually going to cause prices to go further up.

And I don't think it is going to help matters at all,' he explained. Mr Mah was responding to questions in Parliament yesterday on whether the Government would take action to curb soaring COV sums in recent months.

They reportedly doubled in July to between $10,000 and $15,000 for five-room and executive flats, from a mid-level of $5,000 in the second quarter of this year.

The COV has to be paid in cash as banks and the Housing Board cannot lend above a property's valuation. They can lend only up to 90 per cent of the valuation.

'Buyers can choose not to pay a COV,' said Mr Mah. 'I urge flat buyers not to just cough up the COV when asked by agents, but be aware that there are flats available in the market which can be transacted (without) COV.'

They can do research and buy cheaper flats that they can afford, say, smaller flats in less popular or mature estates, he said.

KENNY CHEE

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