HDB flats: No new valuation method

Aug 21, 2008
HDB flats: No new valuation method

WE REFER to Ms Christina Heng's letter, 'Queries on HDB valuation
scheme' (Aug 12).

The methods adopted by the valuation profession are applicable to all
properties, be it HDB flats or private properties. There is no new
valuation method used.

To refresh our earlier reply on June 28 in response to Mr Patrick
Tan's query on 'What determines market value of property', we stated
that the market value of a property is determined on the basis of a
willing buyer and a willing seller, with both parties acting with
knowledge, prudence and without compulsion in an arm's-length
transaction.

For homogeneous properties such as HDB flats, the common valuation
method adopted is the direct comparison approach. This approach is
similar to that used by a potential buyer when considering the
purchase of a flat. He would look at the location, consider the age,
size, design, height and other important characteristics of the flat
and compare the prices paid for comparable flats in the locality.

The final selling price of a property is dependent on the demand and
supply of a property and the negotiation between the buyer and
seller. Some buyers may pay a premium for a flat for personal
reasons. The cash top-up is a legitimate part of the resale market
price. It is the willing buyer and seller that determines the final
price and this final price as considered by the market forces can be
above or below the valuation.

Janet Han (Ms)
Secretariat
Singapore Institute of Surveyors and Valuers