I REFER to Mr Daniel Choy’s letter on Tuesday, ‘Curbing price hikes’.
His assertion that valuation chases after cash over valuation (COV) is incorrect. Rather the valuation process reflects the state of the property market. If there are sufficient buyers who are prepared to pay a higher price than valuation, this should result in a higher valuation.
As Mr Choy rightly pointed out, ‘buyers are generally prepared to fork out between $50,000 and $100,000 for a good location’. This would be an indication of the market demand for properties in good locations, which will result in a higher valuation of such properties.
His suggestion to base ‘a typical flat’s valuation on the average price for the whole of Singapore’ is not valuation, but rather an administrative decision or policy which will be difficult to implement as it would mean that ‘better properties’ would be sold at a lower price and ‘poorer properties’ at a higher one.
In valuation, we need to consider unique characteristics such as location, size, age and condition of the property concerned, and not based on the average prices of all properties.
Janet Han (Ms)
Singapore Institute of Surveyors and Valuers
Source: Straits Times, 30 Oct 2009