On New HDB Resale Procedures
It has been 3 months since the introduction of the new online HDB resale portal on 1st Jan 2018.
What is the material difference one may ask? From a personal perspective,
i) Significant reduction of processing time
From issuing of Option to Purchase, to key handover completion, assuming straightforward transaction with no special conditions;
Process took 5 months previously, now it can be done in 2.5 months (Saving 2.5 months’ time!)
ii) Certain key processes were streamlined and taken "online"
Only 1 trip to Toa Payoh HDB Hub Resale Office required, as one of the appointments are no longer required.
A lot more documents (for both Sellers & Buyers) to endorse online on hdb resale portal, even some of my more savvy clients needs some time to adjust with the information overload.
iii) Generally reduced number of valuation appointments where valuers come down for unit assessment
“Wait what? No more valuers? Does it mean my house no longer gets valued?”
Its not exactly that, but going forward one will not always see a professional valuer being appointed by HDB to come down to the seller’s place to assess the unit anymore. HDB has taken this valuation process “in-house” as part of streamlining the whole resale process, and they will determine the value using* "technology and transaction data to establish the reasonableness of a transacted price". (a.k.a “computerized” valuation).
Can you really arrive at a fair value of the house without seeing it?
This is what my clients, colleagues and I are intrigued with.
Apparently yes, and I have an anecdotal perspective to share. There was a HDB 5-Room transaction which I have completed recently at Woodlands (Admiralty). Long story short, we issued the Option to Purchase (HDB resale purchase document) twice to two different buyer groups consecutively in the space of a one-month duration. The first buyer had forfeited his Option Fee and backed out due to loan approval issues, and we secured another buyer group immediately after.
Now what transpired was for the first valuation, no valuer came to the unit to assess, and the figure was, I assume, derived through “technology and historical transaction data” (This is the valuation figure for the first buyer group which backed out). For the second valuation, a professional valuer was randomly assigned by HDB and physically inspected the unit.
Guess what, valuation figures were exactly the same for both instances.
Note: As the valuation assessments were done within 2 to 3 weeks of each other and there weren’t any transactions done within the same block during the period, nor any significant major market announcements, I believe it is not materially affected by ongoing market conditions then and it is a reasonably fair example to use. Do note it was the “computerized” valuation that came up with the result first, not the traditional “old school” way of valuation.
Undoubtedly, this is only 1 small sample size, but it highlights how technology can be put to productive use, saving man hours yet not giving up accurateness.
However, the cynical side of me notes that with HDB taking back control of most of the valuation process, it has essentially become one of the most important market makers for the local residential property market, since for a start, 80% of Singaporeans stay in HDB public housing, and BTO prices, and now a majority of HDB resale valuation figures, are more or less determined by HDB.
I believe in the short to middle term, we will have stable hdb prices, since HDB has put in place various strong control policy measures and have repeatedly announced they are committed to a sustainable hdb market with reasonably affordable hdb prices. As such, personally I feel HDB housing should no longer be seen as an investment vehicle, but rather first and foremost as a primary means for home occupation. Long gone are the days where multi-fold, double digit capital appreciation percentage gains happen with HDB units, these are the outliers and will increasingly become more of the exception rather than the norm.
*Disclaimer: All views and opinions are of the Author's, and does not represent the official position of ERA Realty Network Pte Ltd.