http://www.straitstimes.com/archive/...perts-20140312
Changes unlikely to affect valuation, say experts
Published on Mar 12, 2014
By Rachel Au-Yong
CHANGES to the way HDB resale transactions are conducted are unlikely to affect the valuation of a flat, said experts.
Rather, they are more likely to spell a mindset change for buyers and sellers, who must learn to focus on a unit’s innate characteristics, instead of the amount of cash they stand to fork out or gain.
The Government announced on Monday that buyers and sellers must now agree on a price before seeking an official valuation – leaving cash over valuation (COV) to take a backseat in resale deals.
“Things will be more grounded in reality,” said Knight Frank head of valuations Png Poh Soon. “You’ll now negotiate in the hundreds of thousands, not tens of thousands.”
“Now, a buyer has to ask himself how much he’s willing to pay for, say, a five-room flat with this facing and this view, not how much cash he has to fork out. This sort of basis is more sound.”
But the way a flat is valued will not change, said analysts. Valuations will continue to be based on direct comparisons of recent transactions done, said a Singapore Institute of Surveyors and Valuers spokesman.
With the transaction database to be updated daily instead of fortnightly, there will be greater transparency in examining these comparisons, valuers said. But with the process reversed – official HDB-approved valuations can be obtained only after a price has been agreed upon – buyers and sellers must observe the market more closely.
“Everybody will have to do more homework,” said property analyst Chris Koh. “If they didn’t, the valuation could stray far from the price. And when that happens, you might see more buyers abandoning their deals, because their down payment is only about $1,000.”
The potential discrepancy between the discussed price and final valuation has some would-be buyers worried.
Mr Roy Lim, for instance, fears inflated prices for an executive apartment in Pasir Ris he is eyeing. “Before, our basis of discussion would be the valuation,” said the 24-year-old, who proposed to his girlfriend last month. “It kept things from going out of hand.”
Pointing out that executive apartments have since been discontinued by HDB, he said: “We won’t have as much information about similar transactions because they are a rare commodity.”
However, Mr Png thinks that buyers looking for more uncommon flats need not worry.
“There will always be transactions happening, and if there aren’t, we will look for comparables,” he said.
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