SHE wants to buy a house but is stuck with a real problem.

Ms Lynn Manay does not have enough cash to pay for the cash-over-valuation (COV) amount her seller is demanding.

That's the cash difference between the property's valuation and the asking price. It is the premium sellers ask for in a bouyant market.

And with the current booming HDB resale market, it means COV prices can now hit new highs, said industry watchers.

So for those in the market looking to buy a resale HDB flat, it is becoming a pretty frustrating affair.

Ms Manay, a cashier, who makes about $900 a month, can afford to buy and service the loan for a three-room HDB flat, but she's unable to fork out the COV amount for that same flat.

Ms Manay, 25, was willing to pay about $150,000 for a three-room HDB resale flat in Bukit Batok, but the buyer wants about $20,000 above valuation for the flat.

This means the selling price for the flat is about $170,000.

Said Ms Manay: 'How can I afford to pay $20,000 in cash for the flat?

'I don't have that kind of money. It's very stressful looking for a flat these days.

'I've been looking for three-room flats in the resale market in many areas and the sellers are asking for high top-up amounts.

'I've calculated that I'll need to top up at least $10,000 cash to buy a place now.'

BORROW FROM RELATIVES

Ms Manay, who is single, is planning to buy the flat with her mother.

The two of them do not qualify for a HDB subsidised flat, hence they have to look at the resale market.

Her mother, 54, has been separated from her husband for 19 years and they have not finalised their divorce.

Ms Manay said she doesn't know where her father is now.

She's currently living with her brother and his wife in a four-room HDB flat in Bukit Panjang.

But the brother has sold his flat because of financial difficulties and will be moving in with his in-laws by February next year.

Added Ms Manay: 'I've been calling property agents for the last three months and they said that I've to top up cash if I want to buy a place.

'I can only pay at most $5,000 cash and even that, I've to borrow from friends and relatives.

'Even if I want to rent a place from HDB, I've to wait for at least a few months and I need a place urgently.'

While she can always rent a place first, the market rental rate for a three-room flat at about $1,200 per month is a big deterrent.

She said: 'I'll rather use that money to pay for a mortgage for a place. To pay about $1,000 for rental is not cheap, and that doesn't include utilities and furniture.'

The current high COV prices is reminiscent of the property bull-run in the mid-1990s, when buyers have to pay a huge premium over the valuation for HDB flats.

Executive apartments in Bishan, for instance, routinely found buyers who were willing to pay more than $100,000 above their valuation, according to a Straits Times report in 1995.

Today, be prepared to pay a premium of at least $7,000 cash for a three-room flat in outlying Choa Chu Kang and similarly for a five-room flat in Yishun, according to HDB's third quarter median COV figures for resale flats.

And that's just for flats in the outlying areas.

The highest COV paid last quarter was a whopping $91,500 for a five-room flat in the central area.

The executive director of HSR Property Group, Mr Eric Cheng said that his firm has received letters from the public asking if they are selling flats with just a $5,000 premium or no upfront cash.He said: 'I've to tell them that I don't have such flats at the moment.

'For those buying a resale flat today, they have to pay upfront cash above valuation. The property market has strengthened, the economy is doing well and it's a sellers market now.

'You can't buy a resale flat now if you don't have money. It's not just the COV, you've to think about paying for property tax, agent's fee and renovation too.'

He advised Ms Manay to rent if she can't afford a place now.

The limited HDB flat supply is expected to improve with over 7,000 new flats to be launched in the next seven months.

This means that the COV situation will improve, said Mr Cheng.

He added: 'Those who want to buy resale flats but can't pay the COV can perhaps wait for next year when a lot of HDB flats will be launched.

'By then, the COV should be more reasonable.'

This article was first published by The New Paper on Jan 1, 2008.

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