All depends on the location. Prime HDB locations... Near MRT... Get a $25000 cash over valuation also hard.
(07-03-2014, 07:16 PM)Curiousparty Wrote: [ -> ]COV can be zero but valuation can still keep rising?
Zero is not good enough.
It will takes -ve COV to get the valuation down...
In short, absolute decline in COV has to be greater than the absolute rise in valuation before the HDB price can be considered to be really coming down...
if hdb prices drops more drastically than private housing, this will only means one thing - this drop is artificial and there is gapping opportunity in the public housing market..investors are not dumb
(07-03-2014, 07:16 PM)Curiousparty Wrote: [ -> ]COV can be zero but valuation can still keep rising?
Valuation of a property is based on recently transacted price of comparables properties. If recently transacted px comes down, valuation will come down. Vice versa, valuation will go up if the transacted price keep going up. It's a vicious cycle. This transacted price includes the COV.
(08-03-2014, 08:10 AM)lvpierre Wrote: [ -> ] (07-03-2014, 07:16 PM)Curiousparty Wrote: [ -> ]COV can be zero but valuation can still keep rising?
Valuation of a property is based on recently transacted price of comparables properties. If recently transacted px comes down, valuation will come down. Vice versa, valuation will go up if the transacted price keep going up. It's a vicious cycle. This transacted price includes the COV.
Actually this cov & valuation thing has been made very fuzzy by free-market forces. Many factors contribute to prices of hdb, including number of PRs buying, prices of private properties, population growth, rental price of HDBs. Perhaps for public housing, it should remain focus on housing people who really needs them. OR, maybe there should be a new category of public housing which serve this purpose. I belive Khaw realise this and is stirring the boat towards this direction but now sure whether the current small changes in the rules is enough.
(08-03-2014, 03:04 AM)pianist Wrote: [ -> ]if hdb prices drops more drastically than private housing, this will only means one thing - this drop is artificial and there is gapping opportunity in the public housing market..investors are not dumb
On the other hand, can also mean that private housing will end up following the public housing market down as "investors" can no longer tap on a rising public housing resale market to provide funds for a down payment for private housing.
Question 1: who is the end-approver of ALL HDB valuations issued by these so called market valuers?
Question 2: does this end-approver has the desire to stuff people who are trying to sell their flats in this market?
(08-03-2014, 03:01 PM)thefarside Wrote: [ -> ]Question 1: who is the end-approver of ALL HDB valuations issued by these so called market valuers?
Question 2: does this end-approver has the desire to stuff people who are trying to sell their flats in this market?
1: it has to be signed by a qualified valuer. The valuation is just a guide for banks to determine loan (for resale flats), individuals looking to get a sense of the property value and institionals (e.g reits). For individuals buying a flats, the transacted price is usually based on the buyers/ sellers negotiation skills and generally mkt condition. It can be above or below valuation. If the final price is well above the valuation price, the buyer may hv a problem to get the loan amount above valuation from bank ( bank may not be willing to loan more than that) and have to cough out with more cash.
2: don't understand your question. But generally they wouldn't try to con people. Banks, hdb usually have a list of qualified valuation firms. Bankers usually give a call to valuers to get an indication, some valuation firms may be willing to match the figure given by the banker but ultimately there are still limitations, e.g. Values must be justified and for residentials, you have find a few comparables properties (same area and transacted recently and adjust accordingly, floor, tenure, view, size etc)to justify the value. If all the recently transacted prices are going down, then the valuation would have to come down.
Thanks for your detailed explanation. But as far as I know, HDB has the final say over what numbers should be in the valuation. Banks will not challenge HDB valuation numbers - they may challenge your credit standing on how you can finance that flat but not the number itself.
How did I know? Well I have heard first hand a number of instances of the valuation report being "overridden" and the number adjusted lower, when the resale market was hot back in 2011 / 2012. When I sold my flat, the market was declining but somehow I did 4 successive valuations and the number came back constant everytime which was the highest number for my cluster, despite softening COV trends (and transaction prices) since middle of last year following the imposition of TDSR.
My interpretation of such behaviour is they have no desire to further feed the up/downcycle of the market. This is one of the levers they have - others are new flat pricing, policy mix on new/resale flats, and the biggest of all - supply. Over time (for this cycle) you are certainly right that valuation across the board will decline but it will be at the pace they want to set, barring further external economic shocks which they will not be able to control.
Anyway, these are just my own views. There are of course official explanations on how the valuation system works. But in Singapore, the invisible hands are not that really of the free market...