While the reduction in Cash Over Valuation (COV) for million-dollar HDB flats is being framed as a sign of market stability, it is premature to assume that the pressure on public housing prices has dissipated. The fact that these flats are still reaching million-dollar price points is, in itself, a cause for concern regarding the widening gap between public housing and the average household income. Even without COV, the sheer scale of these record-breaking prices continues to set a high benchmark that influences the expectations of sellers across the entire HDB market.
Critics argue that focusing on the absence of COV ignores the underlying issue of rising property valuations. If official valuations are simply rising to meet the high prices that buyers are willing to pay, then the market is not necessarily becoming more affordable; it is merely normalizing higher price levels. This creates a feedback loop where the 'new normal' for HDB prices continues to climb, potentially pricing out younger families or those with more modest incomes who are looking to enter the market.
There is also the risk that this trend could mask underlying demand imbalances. If buyers are willing to pay million-dollar prices without COV, it suggests that there is still significant liquidity and demand for prime-location HDB units. Should economic conditions shift or interest rates fluctuate, those who have purchased at these peak valuations may find themselves in a precarious position if the market corrects. The absence of a cash premium does not protect a buyer from a decline in the underlying asset value.
Policymakers and potential buyers should remain cautious. A market that is consistently hitting million-dollar milestones requires ongoing monitoring to ensure that the dream of homeownership does not become an unattainable goal for the average Singaporean. Relying on current valuation trends as a sign of safety may overlook the broader systemic pressures that continue to drive the cost of living upward.