Understanding Property Valuation in Singapore: How It Affects Buyers

Learn how property valuation works in Singapore, why it matters in your home-buying journey, and how it influences loan amounts and CPF usage.

thomsonviewenbloc

Jul 14, 2025 - 16:07

Understanding Property Valuation in Singapore: How It Affects Buyers

Property valuation plays a vital role in Singapores real estate market. Whether you're buying your first HDB flat, a resale condo, or investing in a private apartment, understanding how valuation works can help you make better financial decisions. The valuation figure affects not just the price you pay, but also how much you can borrow, the stamp duty you pay, and the amount of CPF you can use.

In this article, we explain how property valuation is determined, who conducts it, and how it impacts various parts of the property purchase process in Singapore.

What Is Property Valuation?

Property valuation is an independent estimate of a property's market value at a specific time. It is often used by buyers, sellers, banks, and government agencies to ensure a fair and realistic price.

The valuation is not necessarily the same as the seller's asking price. It's based on objective factors like recent transactions, location, size, condition, and market conditions.

Who Conducts the Valuation?

HDB Flats:

Valuation is conducted by HDB-appointed valuers
You must request the valuation through the HDB resale portal after the seller grants you the OTP
The valuation report is valid for 3 months

Private Properties:

Valuation is conducted by a licensed valuer from a banks panel
Usually initiated by the buyers bank as part of the loan application
You may also pay for an independent valuation before making an offer

How Is Property Valuation Calculated?

Professional valuers consider multiple factors:

Recent Comparable Transactions
- Prices of similar units in the same area or development
Location
- Proximity to MRT, schools, amenities, and CBD
Floor Level and Facing
- Higher floors with better views usually fetch higher values
Unit Size and Layout
- Larger, more efficient layouts are valued higher per square foot
Condition and Renovation
- Well-maintained or newly renovated units may receive a premium
Remaining Lease (for leasehold properties)
- The fewer the years remaining, the lower the valuationespecially for HDBs under 60 years

Why Valuation Matters for Buyers

1. Loan Eligibility

Banks will finance up to 75% of the valuation (not the asking price). So if the valuation is lower than the price you agree to pay, you must top up the shortfall in cash.

Example:

Agreed price: $1,000,000
Bank valuation: $950,000
Maximum loan = 75% $950,000 = $712,500
Buyer must pay the extra $50,000 in cash

2. CPF Usage

CPF can only be used up to the valued amount. Any amount above it must be paid in cash.

3. Stamp Duties

Buyers Stamp Duty (BSD) and Additional Buyers Stamp Duty (ABSD) are calculated based on the higher of:
- Purchase price, or
- Property valuation

So even if you get a bargain below valuation, you may still pay duties based on the higher figure.

What Is Cash Over Valuation (COV)?

COV is the difference between the sellers asking price and the official valuation. It applies mostly to HDB resale flats.

If the seller demands more than the HDB valuation, the excess must be paid in cash
CPF and loans cannot cover COV

Why COV Happens:

Hot market or high demand areas
Scarce flat types (e.g., corner units, rare layouts)
Upgraded interiors or renovations

Tip: Negotiate COV carefullyit directly affects your upfront cash outlay.

When Is Valuation Requested?

HDB Resale:

After the Option to Purchase (OTP) is granted
Use HDBs portal to request valuation
Usually required before loan and CPF application

Private Property:

After OTP is issued or upon loan application
The bank arranges valuation as part of their due diligence
Some buyers request informal valuation before OTP

Can You Appeal a Valuation?

Yes, but its rarely successful unless you can prove:

Recent transactions that support a higher value
Unique factors missed in the original valuation

In most cases, its easier to negotiate with the seller based on the valuation rather than trying to increase it.

Tips for Buyers

Get pre-approved (AIP) by banks before starting your search
Do your research on recent sales in the area
Budget for COV, especially if buying HDB resale
Use valuation reports to negotiate price or secure better loan terms

Conclusion

Understanding how property valuation works gives you a solid foundation in your home-buying journey. It not only affects how much you can borrow or use from CPF, but also determines your upfront cash requirements and stamp duty obligations. Whether you're buying an HDB or private property, make valuation part of your research and budgeting strategy to ensure a financially sound investment.