SG Wealth Builder is pleased to form a partnership with SRX Singapore Property to bring you the latest information on property trend in Singapore. Below article is based on information provided by SRX Research and readers must not interpret it as a form of financial advice.Since the launch of X-Value on 20 Mar 2014, more than 60,000 homes have their X-Value calculated on www.srx.com.sg and Agent Connect apps. Buyers, sellers, and real estate professionals have used it as a starting point in pricing their home.
In order to understand how closely HDB valuations track the X-Value, all SRX HDB transactions in 2014 with complete valuation data were used in a comparison study.
From 1 Jan 2014 to 30 Mar 2014, the study analyzed a total of 1,774 HDB transactions. 98.2% of all valuation prices fall within a +-10% range of the X-Value.
Comparison with international standards
A guideline to assess where acceptable valuation margins stand is the judgement of J Coulson in K/S Lincoln v CBRE Hotels (2010). Source: http://bit.ly/PRlH4e
The Court found that the valuation was within a +- 10% margin and hence ruled that the valuation was acceptable.
In another Australian study done in 1983, the actual percentage of valuations within a variation range of < 10% is 95% for a ‘Simple Property’ done by valuers. Source: http://bit.ly/1h7toOI
The equivalent table for the margin of difference between HDB Valuations and the X-Value is shown below.
|Delta VOX||Proportion of all transactions|
Within a +-5% range of the X-Value, more than 80% of the valuations fall within this range. This compares favourably with the Daniels findings of 50% of ‘Simple’ Property for a +-5% range. Likewise, within a +-10% range of the X-Value, more than 98% of the valuations are within the range. This proportion is higher than the 95% of valuations in Daniels findings for the same range.Moving forward, National Development Minister Khaw Boon Wan made an announcement in Mar 2014 that buyers and sellers should move away from Cash-Over-Valuations (COV) in negotiating HDB prices. Instead, the emphasis should be on recent transactions. Therefore, we would expect future Valuations to fall within an even tighter range of the X-Value which is based on recent transactions.
Conclusion: X-Value is an excellent estimation of the HDB Valuation where majority of the valuations fall within a narrow band of smaller than +-3%.