Before you buy or sell a property, understand the considerations that affect its market value.

Valuation, or the estimation of a property’s worth, is the cornerstone of any negotiation between the buyer and seller in a property transaction i.e. to ensure that the seller achieves the maximum achievable price for his property and the buyer does not ‘overpay’ for the property.

The valuation process is both an art and science. The Comparison Method of Valuation is largely used for determining the market value of residential properties, where recent sales of properties that are similar to the subject property are selected. Typically, no two properties are identical and accordingly, we compare specific aspects or characteristics of the sales comparable with the subject property, making adjustments for factors including, but not necessarily limited to:

Location

In Singapore, properties which are located nearer to the Orchard Road shopping belt and Central Business District command a higher value due to the shorter travelling times for commuting to work and the wide variety of retail and F&B outlets.

Floor level, views, and orientation

It is generally accepted that the higher floor an apartment is located on, the higher the price of the property as a higher floor unit would be more windy, offer better air quality and have less insects. This is also the case for properties with unblocked views. In sunny Singapore, properties having a north-south or south-eastern orientation are more prized.

Age and condition

Buyers are willing to pay a premium for new properties or renovated properties as this saves them the hassle of renovating the property. Renovation bills can be hefty for properties that require extensive work to be done.

Tenure

Freehold properties command a premium over leasehold properties. In the case of diminishing leases, future buyers may have to pay more cash upfront for the purchase of such properties.

Size and configuration

It is a generally accepted market practice in Singapore that the larger the unit, the lower the per square foot for such units is as compared to smaller-sized properties. Units with efficient layouts are also more sought after than odd-shaped units as the latter might be more costly to renovate.

Facilities and amenities

Buyers are willing to pay higher prices for properties that are situated near transport nodes such as MRT stations and bus interchanges. Properties that are located near MRT stations command a premium even if the station is further away down the MRT line. The same applies to proximity to shopping malls and supermarkets due to the convenience that these offer. The availability and range of facilities within a particular development is also a deciding factor for buyers. Newer developments typically fetch higher prices due to the wide range of facilities they offer.

Date of transaction

Although valuers take into consideration past transactions of comparable properties in deriving market values, adjustments have to be made to take into account the state of the market i.e in the case of a rising market, past prices will have to be adjusted upwards.