VALUATION ACCURACY OF PRIVATE RESIDENTIAL PROPERTIES IN SINGAPORE

Abstract

The issue of valuation accuracy is important for property professionals and investment analysts. The valuer uses his knowledge about the property, the submarket, past performance and expectations about future performance to arrive at a valuation estimate. The question of valuation accuracy arises whether the valuer is able to anticipate market trends accurately. Valuation bias occur when the value estimates are systematically and consistently above or below the actual transaction prices On the other hand, valuation error can be seen as the typical difference between the value and the actual transaction price It is possible that the errors may be large which will affect the efficiency and purpose of the valuations. Thus efficiency of valuations is every bit as important as the absence of bias. After a review of the literature germane to the study an empirical analysis using valuations of the private residential properties in Singapore, the study concludes that value generally reflects price, thus valuers are able to predict market movement accurately. There is generally a conservative bias in most valuations, reflecting that valuers generally tend to undervalue a property.