Property valuation — What goes into them and why they’re important

10 min read

Bank valuations are a complete mystery to many home buyers. In fact, we’re willing to bet you didn’t even know what they were; you’re only now Googling them to find out why your loan is lower from one bank than another.

Whether you are searching to purchase a new unit, striving to sell your existing home or simply doing anything property-related, it’s important to know what goes into a property valuation. 

After all, it is crucial to obtain an indicative value of how much your property is worth to ensure that you are getting the most out of your investment and what the market has to offer.

What exactly is a property valuation?

Property valuation is an estimate of a specific property’s value, as provided by a licensed appraiser.

There are 2 types of property valuations — indicative valuations and actual valuations.

Indicative valuations

Indicative valuations are simple estimations of the value of a property, usually derived by taking into account the average price of properties bought and sold around the same area of said property.

These valuations are usually conducted by property owners or agents through observation and research. Alternatively, indicative valuations can be done using free online valuation tools or by researching historical transaction data of a particular property.

Actual valuations

On the other hand, actual valuations are much more detailed and performed by qualified surveyors and valuers. They are commissioned to ascertain a property’s market value based on a series of quantifiable metrics.

This happens when you want to take out a home loan. The bank will engage someone to check out the house and conduct an actual valuation*. This can result in a different ballpark figure from an indicative valuation.

(*Unless the property is still under development. In these cases, the bank will usually accept the developer’s price as a fair valuation. )

Don’t confuse the official valuation with the ballpark estimates provided by a property agent. Those are all great ways to guesstimate property values — but the official valuation is the one that the bank will use.

What are the factors that affect property valuation?

Each licensed appraiser has their own methods. And while they won’t disclose the exact maths behind it (some appraisers will value certain factors more than others), most will tell you they look at the following:

  • The land value, which includes current and future amenities, accessibility, and even factors like traffic congestion and pollution
  • The price histories of surrounding properties, and of the property itself
  • Rental incomes in the area over time
  • The size of the property and the facing, layout, number of rooms, etc.
  • The quality of finishing, and the overall maintenance standards
  • The value of any renovations or additions
  • The floor you live on (the topmost floors have the highest value)
  • The position of your particular block and the resulting light, heat, and view
  • Quality of the facilities, especially for condominiums
  • Redevelopment potential
  • Remaining lease

And many, many others. Due to the exacting measurements and precision, a licensed appraiser can come up with a valuation that’s surprisingly different from guesstimates. It’s also possible for two licensed appraisers to come up with very different valuations, as they place different weightage on the various factors.

You will be provided with a valuation report detailing the structure, land size, condition and consequent value of the property. Ideally, the best way to ensure you get an accurate price indication of your property is to seek three different valuation quotes and take the majority range.

For HDB flats, a valuation report can be obtained directly from the HDB.  The valuation will be carried out by one of HDB’s panel of valuers, who are professionally qualified and licensed by the Inland Revenue Authority of Singapore (IRAS).

For private properties, you can find valuers at the Singapore Institute of Surveyors and Valuers (SISV). However, some of the more established realtors like CBRE, Jones Lang LaSalle (JLL), Colliers and Savills also offer similar valuation services.

You may be asked to pay for the valuation yourself — this often falls in the range of S$500 to S$700.

Benefits of doing a property valuation for sellers

A valuation report, combined with a good knowledge of prices of similar properties, will help homeowners better price their property for sale. Aside from the obvious advantage of acquiring a firm understanding of how much their property is actually worth, getting a proper valuation done will also benefit homeowners by:

  • Allowing peace of mind for potential buyers intending to purchase the property by letting them know that a “fair price” is paid for it.
  • Being used as a supporting document to help potential buyers get a bank loan.
  • Avoiding pricing disputes with the prospective buyer.

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How does valuation affect the property purchase for buyers? 

For buyers, the valuation process has three significant effects on your property purchase:

  1. It will affect the loan quantum
  2. Higher valuations mean more taxes
  3. It could be cause to re-evaluate your decision

1. It can affect the loan quantum

When taking a home loan, the loan quantum (the maximum you can borrow) is based on the lower of the property price or valuation. The loan-to-value (LTV) ratio determines this. The key thing to remember is that the lower the property valuation, the less you can borrow to buy it.

A lower valuation means a smaller loan.

Under normal circumstances, the maximum LTV is 75% when you take a bank loan. This means you can borrow up to 75% of the property price or valuation, whichever is lower.

Say the seller’s price is S$1.7 million, whereas the valuation places the property at S$1.68 million. Your maximum loan quantum is 75% of S$1.68 million, which is S$1.26 million. This leaves you with a much larger downpayment of (S$1.7 million – S$1.26 million) = S$440,000, versus just S$425,000 (25% of S$1.7 million).

For this reason, some property buyers will seek a higher valuation by approaching different banks. This is especially if the asking price is greatly in excess of the actual valuation.

Each bank could be using a different appraiser, and will hence ascribe a different value to the property. To reduce the cash outlay, a buyer might be looking for a valuation that better matches the seller’s asking price.

2. Higher valuations mean more taxes

Taxes such as the Buyer’s Stamp Duty (BSD) and Additional Buyer’s Stamp Duty (ABSD) are applied to the higher of a property price or valuation. For example, if you purchase a property for S$1.5 million, but the valuation is S$1.55 million, you would pay BSD on S$1.55 million. This comes up to S$46,600.

Say you’re buying a second property, you have to pay an ABSD of 17%. Let’s say you manage to get the better of the seller, and purchase the property for S$1 million. However, the official valuation is S$1.2 million. In this situation, you would have to pay 17% of $1.2 million, or S$204,000.

If the valuation had been as low as the price, you would only have paid ABSD of S$170,000. (But of course, this is more than covered by having bought the property for S$200,000 under value!)

For this reason, some buyers don’t want a high valuation on the property they want to buy.


3. It could be cause to re-evaluate your decision

The actual valuation can differ quite a lot from what a property agent claims. After conducting a valuation, you may find the property is worth less or more than expected. This is why seasoned property investors often hire valuation companies of their own accord, even before the bank asks for it.

The valuation also affects your CPF Withdrawal Limit

There is a limit to how much CPF you can use to pay for your property. This is referred to as the CPF Withdrawal Limit. At present, this is set at 120% of your property’s price or valuation, whichever is lower.

So for a flat priced and valued at S$600,000, you can only withdraw up to S$720,000 from your CPF to pay for it.

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There is a limit to how much CPF you can use to pay for your property.
There is a limit to how much CPF you can use to pay for your property.

(How would you ever end up paying 120% of your property value? Because you need to factor in extra costs such as stamp duties, legal fees, interest rates of the monthly instalments and other things you’ve paid with your CPF savings for the property purchase. While you’re not likely to exceed the withdrawal limit on a flat, it’s quite possible to do so with private property, especially if your interest rate is high.)

What can you do if you’re not happy with the valuation?

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The simplest solution is to reach out to more banks, until you get the most favourable valuation.

Each valuation expert has their own process for valuing properties. For example, one valuation firm may rate the freehold nature of a property much higher than another. Another firm may consider bottom and top-floor units more valuable than mid-floor units. Consulting five valuation firms can result in five different valuations.

This means that, if you don’t get a valuation you’re happy with, you can use different companies (or approach different banks), until you arrive at a valuation you’re comfortable with.

There’s no guarantee, however, that using another valuer will give you the results you desire. You may need to talk to several banks or valuation firms, before finally settling on a number you’re happy with.

Use a mortgage broker to help you find different valuations

Consider engaging a mortgage broker, who can help you to apply for home loan. They can also call many banks at once, and get multiple valuations and interest rates. This is much faster than manually obtaining valuations from different banks.

It may also save you a lot of money, if you have to pay for the valuations yourself.

Planning to sell your house above market value? Let us help you by connecting you with a property consultant.

If you found this article helpful, recommends COV Singapore – What Is Cash Over Valuation (COV) of a resale HDB flat and How to sell a flat with a perceived disadvantage, like being West sun-facing or near a rubbish chute.

Frequently asked questions

What is a property valuation?

Property valuation is an estimate of a specific property’s value, as provided by a licensed appraiser.

Who determines the valuation for HDB flats, or new properties?

For public housing, HDB decides on the official valuation for the flat. For new properties, such as condo units bought from the developer, banks usually base it on the developer’s asking price.

Who determines the valuation for private properties?

For private properties, you can find valuers at the Singapore Institute of Surveyors and Valuers (SISV). However, some of the more established realtors like CBRE, Jones Lang LaSalle (JLL), Colliers and Savills also offer similar valuation services.

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Looking to sell your property?

Whether your HDB apartment is reaching the end of its Minimum Occupation Period (MOP) or your condo has crossed its Seller Stamp Duty (SSD) window, it is always good to know how much you can potentially gain if you were to list and sell your property. Not only that, you’ll also need to know whether your gains would allow you to right-size to the dream home in the neighbourhood you and your family have been eyeing.

One easy way is to send us a request for a credible and trusted property consultant to reach out to you.

Alternatively, you can jump onto’s Property Value Tool to get an estimate for free.

If you’re looking for your dream home, be it as a first-time or seasoned homebuyer or seller – say, to upgrade or right-size – you will find it on Singapore’s fastest-growing property portal

Meanwhile, if you have an interesting property-related story to share with us, drop us a message here — and we’ll review it and get back to you.

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Reader Interactions


    • It’s really a nice and useful piece of info. I’m happy that you just shared this useful information with us. Please stay us up to date like this. Thanks for sharing.|

    • Francisco Dy

      Property buyers and sellers should be aware of the following:

      (1) Valuation is “more of an art” than a science”. The valuation of a property will more likely be LOWER if it is done for the buyer (or bank) and HIGHER if done for the seller. Valuers givew a

      (2) Many, if not most, are not aware of the constraints imposed by the CEA Code of Ethics and Professional Service Manual on licensed real estate agents. The agent can only provide recent data on similar properties in the same vicinity. Agents cannot discuss issues beyond their knowledge and expertise (like valuation issues – fair value, market valuation, indicative value vs. market price vs. fair value, valuation methodologies).

      (3) Valuers often just use the direct-comparison method as the main method of valuation. According to the SISV Valuation Standards and Practice Guidelines, valuers are encouraged to use additional methods of valuation as a cross-check to the main method of valuation. Many do not since it is not a requirement and this could lead to wrong valuation because it can perpetuate undervaluation or overvaluation.

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