If you’re looking for an HDB valuation, chances are you’re thinking of buying an HDB resale flat. How much can you expect to pay for an HDB resale flat in 2024?
Due to the sustained increased demand for an HDB resale flat, prices for HDB resale flats have continued to climb. According to HDB Q4 2023 flash estimates, HDB resale prices have climbed continuously on a quarterly basis since the second quarter of 2020. And based on HDB resale statistics, Q3 2024 saw more resale transactions than the previous quarter, and 20% more than the same period in 2023.
If you’re a buyer looking to buy a resale HDB flat, obtaining the HDB valuation price is important as it will determine both the HDB loan and CPF amount that you can use to finance your home. While you must first agree on the price with the seller and sign the Option to Purchase (OTP) before getting the HDB flat valuation, you can still do your research so that you won’t have to pay too much cash over valuation (COV) or cash in excess.
In this article, you’ll learn how to check the valuation of HDB, how the HDB valuation will affect you, and some other key things you should note about it.
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Cash Over Valuation (COV) for HDB Flats (Video)
HDB Valuation for Resale Flats: An Overview
| What is it? | HDB’s official determination of how much the resale flat is worth |
| What does it affect? | The amount of CPF savings you can use, the loan amount you may take, and COV to pay |
| How to get a valuation report? | After signing the OTP, the buyer can submit a Request for Value |
HDB Resale Valuation: How Does It Work?
The HDB valuation is not just an estimate of how much the resale flat is worth. It is part of the process of buying your HDB resale flat, as the HDB valuation price is the only official way to determine how much an HDB resale flat is worth and how much COV you may need to pay.
If you’re buying a resale HDB flat with your CPF savings, or with a housing loan from HDB or a bank, you’ll need to submit a Request for Value from HDB.
As a resale buyer, you’ll first need to negotiate with the seller on the selling price and pay him/her the option fee before requesting an HDB valuation.
HDB Valuation Request or ‘Request for Value’
Once the seller has granted you the option to purchase or OTP, you can then submit the HDB valuation request.
You, the buyer, can submit the ‘Request for Value’ via the HDB Flat Portal, or ask your property agent to do it on your behalf on the e-Resale e-Service or Estate Agent Toolkit. Once done, you will be able to see the progress and status of your Request for Value on the HDB Flat Portal.
If HDB decides that a valuation inspection is indeed required to determine the HDB valuation price of the flat, an assigned valuer will visit the flat. Do note that you must complete the ‘Request for Value’ (you must obtain the outcome) before you submit the resale flat application.
How Does the HDB Valuation Affect HDB Resale Buyers?
The HDB flat valuation will determine the amount of CPF savings, housing loan, and COV (or not) to pay for your resale flat.
Let’s say that you and the seller have agreed on the selling price of $725,000. You pay the OTP and submit the HDB valuation request. The official HDB valuation of the HDB flat, however, is $700,000. This would mean that you will be paying a COV (in cash) of $25,000. This is on top of the downpayment (based on the HDB valuation) you will need to pay for the HDB resale flat.
The amount of CPF savings and housing loan that you can use is based on the lower of the HDB valuation or price. In this example, it’s $700,000.
However, the COV will affect the stamp duty that you pay, namely, Buyer’s Stamp Duty (BSD) and Seller’s Stamp Duty (SSD) as they are based on whichever is higher: the valuation or price. In short, COV would result in higher BSD and SSD.
However, the COV will affect the stamp duty that you pay, namely, Buyer’s Stamp Duty (BSD) and Seller’s Stamp Duty (SSD) as they are based on whichever is higher: the valuation or price. In short, COV would result in higher BSD and SSD.
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1. Amount of CPF Savings You Can Use
| The remaining lease of the property is at least 20 years and can cover the youngest buyer until at least age 95 | CPF usage |
| Yes | Amount of CPF used is capped at the lower of the value of flat, or price of the flat at the time of purchase. |
| No | Use of CPF will be prorated based on the extent of the remaining lease of the property and can cover the youngest buyer to the age of 95. This will help buyers set aside CPF savings for their housing needs during retirement (e.g. a replacement property). |
The amount of CPF savings that you can use to pay for your HDB resale flat is based on the remaining lease of the property.
Using the example above, you’ll be able to use your CPF savings up to the valuation of $700,000 if the remaining lease of the flat is at least 20 years.
You may use the CPF online calculator to calculate the amount of CPF savings that you can use.
2. Loan Amount You Can Get
HDB loan
75%
Up to $525,000
Bank loan
75%
Up to $525,000
If you’re taking a loan from HDB or the bank, the loan amount is based on the valuation amount and not the selling price. Specifically, the LTV ratio of the resale flat will determine the maximum amount that you can borrow from HDB or the bank.
After the August 2024 property cooling measures, the LTV for HDB loans has been reduced to 75%. This is the same as the LTV for those opting for a bank loan.
Based on the valuation of $700,000, you can take up a loan of up to $525,000. If the remaining lease of the flat does not cover the youngest buyer from the age of 95 and beyond at the time of flat application, the loan limit is prorated.
3. COV You Might Have to Pay
COV is essentially the difference between the selling price and the official HDB flat valuation.
Since the housing loan (whether it’s from HDB or a bank) will only cover up to the HDB property valuation amount, you’ll have to pay the balance in cash.
As explained in the example above, this means that you’ll have to pay the COV of $25,000 in cash.
HDB property valuation played a huge role in the sky-high COV prices before the government introduced a cooling measure in 2014 to bring down property prices.
However, increased demand for resale flats has seen COV again in the spotlight amid a resilient property market, which has seen more buyers paying COV for their choice of HDB resale flats.
4. Seller’s Stamp Duty (SSD) the Seller Might Have to Pay
In most cases, HDB flat owners can only sell their homes after fulfilling their Minimum Occupation Period (MOP). That means HDB sellers do not typically incur any Seller’s Stamp Duty (SSD) when selling their property after the holding period of three years – shorter than the shortest MOP of five years.
However, if an HDB owner is successful in appealing for their MOP to be ‘waived’ within three years of acquiring it (i.e. within the holding period), they may have to incur SSD when selling their property. Since SSD is based on either the selling price or market value of the property, the higher the COV, the higher the SSD.
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What Are Some Factors That Affect the HDB Valuation and COV?
How much COV you pay depends on your agreed buying price and the valuation of the resale flat. Some factors may make an HDB flat more appealing to buyers but yet are not taken too much into account by HDB in its valuation.
1. Location of the HDB Flat
Flats located close to amenities such as MRT stations, shopping malls, and schools tend to sell at a higher price. They’re also more likely to fetch a higher price if they’re located in mature estates, where more amenities are available for residents.
For convenience and accessibility, people are more willing to fork out a premium to buy these flats.
For example, a resale flat in Bishan is more likely to sell above the flat’s valuation because of the flat’s location and surrounding amenities, compared to an HDB flat located in Woodlands.
The same goes for buying a resale flat in Tanjong Pagar. Given its proximity to the CBD, it’s more likely that people will pay a higher COV for it.
2. Condition of the HDB Flat
Flats with extensive renovations and furnishings tend to fetch a higher price. People are also more likely to pay more for older resale flats, provided that they’re well-maintained.
On the other hand, if the resale flat that you’re thinking of buying looks run down, it’s more likely that the COV will be lower.
3. Size and HDB Flat Type
Larger flats in general command a higher selling price.
If you’re eyeing a rare resale flat, such as an HDB maisonette or jumbo flat, be prepared to fork out a higher COV. As these flat types are no longer in production, they’re highly in demand because of their rarity.
Experienced property agents, especially those specialising in the particular estate, may also be able to advise you on what kind of COV to expect.
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HDB Valuation Report: Things to Note to Receive One
Before you decide on buying the resale flat and submitting a request for valuation, be sure to take note of the following administrative matters prior to receiving your valuation report:
- You’ll need to pay a valuation fee (aka admin fee) of $120 including GST for the HDB Request for Value (the HDB valuation request).
- You’ll need to submit the Request for Value by the next working day after the Option Date stated in the Option to Purchase.
- Should HDB decide that a valuation is needed, they will assign the appointed valuer to contact the flat seller to arrange for a flat inspection.
- If you’re happy with the HDB valuation, you’ll have to submit a separate application to buy the resale flat.
- Once the value of the HDB flat is published on the HDB Resale Portal and you’re satisfied with it, both buyer and seller will need to submit their portions of the resale application within three months. Otherwise, you’ll have to submit another request for valuation.
What You Can Do to Get an Idea of the HDB Valuation and Reduce COV Amount
To get a better sense of the HDB resale flat’s valuation, you can start by doing some due diligence – even if you are already consulting a seasoned property agent. There are various methods for you to do so on your own:
- You can get an estimation of the price of resale flats in the estate by referring to the transacted resale flat prices on HDB.
- You can also search for similar-sized HDB flats in the same area/estate on PropertyGuru as the one you are keen on getting.
Each of these methods will give you a rough idea of the possible selling price range of the HDB resale flat. Alternatively, you may use PropertyGuru’s valuation tool.
With the baseline price in mind, you can then use that as a basis for negotiation with the seller. Make sure to negotiate with the seller so that you reduce as much COV as possible. But do also remember not to be too aggressive with your bargaining because it can indicate that you aren’t a genuine buyer and this may just turn off the seller of your dream home.
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