Personal Finance Term
Property Valuation
A professional estimate of a property's market value, used by banks to decide how much they will lend. The bank lends against the lower of the valuation or the purchase price.
When you apply for a home loan, the bank appoints a registered valuer to assess the property based on recent comparable sales, location, size, condition, and title type. The bank then applies your margin of finance to this figure — so if the valuation is below the price you agreed with the seller, your loan amount shrinks and you must cover the shortfall in cash on top of the normal down payment. For sub-sale and auction purchases especially, an under-valuation is a real risk to budget for.
Valuation also matters when refinancing, where a higher market value can unlock more equity for a cash-out, and at sale, where it informs your asking price and the RPGT gain calculation. You usually pay a valuation fee as part of the loan's upfront costs. For new launches the developer's price is taken as the value, so valuation is mainly a concern in the sub-sale market.