When buying a property, a common piece of advice that we’re always given is to “check the price or transaction history”. This makes sense for many reasons, as it will also impact valuations (and hence your available financing). However, most people have pointed out to me that this is easier said than done – most lay persons don’t have the resources or the know-how to look up the prices.
In this article, I’ll explain some of the ways to get the transaction history, and how to properly compare the prices:
Where can you find the transaction histories of properties?
I’ll also tell you a little about the bank or HDB’s valuation, and how it can affect you if you can’t check the transaction history.
1. Through comparing listings (not very accurate)
This is the “old school” method of compiling listings, and comparing the asking prices. For example, you might collate all the listings in the same block, or in properties within a one-kilometre radius, to get a price estimate.
The good news is, this information is very easy to obtain – most sellers want you to see their listings, and you can find it on various property websites, in newspapers, etc.
However, this method is not accurate, as the listing price is rarely the actual transaction price. Sellers expect that you will bargain down the price, so the numbers you’re seeing will be higher.
For example, here are some of the spotted asking prices at Laguna Park condo this year:
(Note: Data from Square Foot Research)
|Date||Unit Size (Sq. Ft.)||Asking price|
|7 Nov 2020||1,453||$1,103|
|12 Oct 2020||1,453||$1,163|
|1 Nov 2020||1,615||$1,102|
Now however, take a look at the last actual transaction prices:
|Date||Unit Size (Sq. Ft.)||Transacted price|
|9 Nov 2020||1,453||$998|
|28 Oct 2020||1,453||$998|
|11 Aug 2020||1,615||$1,002|
Note that this also applies to new launch condos – the developer’s given price (e.g. $16XX psf) is often before any negotiation or discounts.
So do bear this mind, when attempting to compare prices. What you should look for is the history of actual transactions, not just a compilation of past listings or previous asking prices.
If you truly don’t have anything else to go on, this may be your only way to get a general sense of the price. As a very loose guideline, the actual transaction price tends to be 10 per cent lower than the asking price.
2. By checking caveats lodged with URA
Once a buyer secures the Option to Purchase (OTP) for a property, it’s common for their law firm to lodge a caveat with URA. You can think of this as public notice that the property has been “choped”, and anyone attempting to buy it will be alerted to this.
(The seller is not supposed to accept other buyers’ offers while your Option period is valid, otherwise you can take legal action against them).
Therefore, the caveats lodged with URA reflect the actual price of the property. This makes it possible to check the transaction history of units in a given development. The URA site, is, in fact, one of the main sources of data used by property agents, real estate firms, etc.
However, there are some limitations. There are only records for the past 60 months, after which the information goes away. So if there hasn’t been any transactions in your chosen development during this time, you won’t be able to find any records of past transactions.
Also, note that some transactions are not lodged with URA. Some buyers don’t want their law firm to lodge the caveat (as they may not want to reveal what they paid). In some cases, they may have bought the property on the spot, without any preamble like securing the OTP etc.
3. Paid accounts with property sites
Some property sites, such as 99.co, Edgeprop, etc. offer paid accounts, through which you can view transaction histories. Some of these sites also have graphing and comparison tools, to speed up the process.
However, it’s usually veteran property investors or industry professionals who will pay for such accounts. For the typical home owner, the expense is rarely justifiable (subscriptions costs are around $355 per year; in some cases it means paying for functions you don’t need, like being able to put up listings).
That said, I do know of some home buyers who pay for such accounts. These are buyers who feel the need to check the data themselves, and this is one way to do so.
Do note that most of these sites draw their data from caveats lodged with URA anyway (see point 2).
4. Valuation portals
A quick Google search will call up valuation portals, that will attempt to approximate your property value. These are usually driven by algorithms, and it’s uncertain how accurate the given values will be.
These are quite new in the market; while there’s no harm in trying (most are free, although they may demand your email address), it’s best to use them as a guideline and verify the given price among the other methods here.
5. Having a property agent check for you
This is the simplest way to do it; and if you’re a buyer for a condo, you generally don’t pay for it anyway (by convention, the buyer and sellers’ agents split the commission from the seller).
A property agent has access to wider resources from their real estate firm, which have extensive records that go back decades. Even if their firm doesn’t have it, they have access to personal contacts and tools that do. Besides, an agent may already have made previous transactions at your desired property, so they have more in-depth knowledge (e.g. they may know that certain units in a given block should transact for less, as the view is partially obstructed).
You can drop me a message on Facebook, if you want to know more about the transaction history of a given property.
The transaction history, even if you have it in entirety, may not represent the value or eventual price with 100 per cent accuracy. Some additional factors to consider are:
(As a loose rule of thumb, there should be at least five transactions in the given development within the year, to get a proper picture of prices).
With regard to resale flats, there is sometimes a discrepancy between HDB’s valuation and the actual sale price. This is called the Cash Over Valuation (COV). For example, if you agree to a price of $350,000, but HDB’s valuation is later only $330,000, the COV is $20,000.
The COV must be paid in cash, and it’s not covered by the bank or HDB loan. Also, bear in mind that (1) HDB does not publish COV prices, and (2) you won’t know the COV until after you put down the deposit for the flat.
As such, it’s very important to know the transaction history, to settle on a price that isn’t far off the mark.
With regard to private property, the maximum bank loan is 75 per cent of the price or valuation, whichever is lower. If you agree to pay a higher asking price than the valuation, you will also have to fork out the difference in cash.
(Or you can go to a different bank for a higher valuation…but then you could be forced into accepting a higher interest rate, from a pricier loan package).
In summary, the valuation impacts the amount of financing you can receive. So while past transactions don’t indicate this exact valuation, they can help you get as close to it as possible.
If you dislike the idea of paying the difference between an asking price and a valuation, I suggest you consider buying new properties. With new condo launches or BTO flats, the valuation is always considered to be the same as the developer’s price.
For more on Singapore’s real estate scene or private properties, follow me on Ron Chong Property.sg; I’ll keep you updated on the essentials, whether you’re buying, selling, or simply considering.