VALUATION OF HDB FLATS

VALUATION OF HDB FLATS

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4.

Mr Zaqy Mohamad asked the Minister for National Development what is the valuation method used by the HDB to set prices for its new flats and how does the HDB value its subsidised flats at market prices when new flats are priced by the HDB and land prices are also set by the Government.

Mr Mah Bow Tan: It is an established valuation principle that the best indication of the market value of a property is the price of similar properties in the vicinity, transacted on a willing-buyer willing-seller basis. Adjustments can then be made to the market value of the property, to account for differences in attributes between the properties under comparison such as location, floor area, lease term, age, view, orientation and storey height.

HDB adheres to the above principle when pricing new HDB flats. Specifically, the prevailing market value of new HDB flats are assessed using recently transacted resale prices of similar flats in the vicinity, with appropriate adjustments factored in to account for differences in attributes. HDB then sells the new flats below their prevailing market values, so that flat buyers enjoy a market subsidy when they buy the flats.

HDB prices its flats relative to their market cost rather than development cost (i.e. the land and construction cost), so as to reflect the flats’ real market values.

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