Uncover the Essential Insights for Property Investment in Hong Kong: Property Valuation Guide

This article will introduce one of the key points you should know before purchasing property in Hong Kong, HK Property Valuation. Well understanding this topic can help you smoothen your house-hunting journey, save time and avoid potential risks or traps during the deal!

Estimating the value of real estate is necessary before purchasing a property in Hong Kong, especially when buyers would like to apply for mortgage with a nice loan-to-value ratio. Usually, banks will consider the property value with several factors like location, building age, popularity, number of transactions, historic transaction price, property background and etc for property valuation. Thus, there will be a possibility that some estates or properties may be not able to show the bank value because of fewer transactions.

Besides, be aware each bank or real estate-related institution may have different factors in property valuation, and there will be differences in valuation of the same property across multi-platforms. The valuation of Bank A can be much higher or lower than Bank B. So it is important to compare the valuation with different banks. If the value quoted from Bank A is $6,500,000 but the value from Bank B is $7,000,000, the borrower can choose the second one.

If buyers want to ensure the most accurate property value in order to gain the best loan-to-value ratio in a mortgage application, finding a $0 charge mortgage agency could be an option.

Understanding 6 major factors that affect property valuation would like the easiest way to understand property valuation deeply. Those major factors are location, property features, estate condition, district price trends, economic situation, and government policy.

1) Location:

- Location always affects property price, downtown, with completed Infrastructure support, and transportation like MTR station usually gains higher value

2) Property Features:

- Number of floors, orientation, views, size, or even historical background will affect the valuation directly

3) Estate condition:

- Building age, estate popularity, and structure maintenance could be factors to consider

4) District price trends:

- Transaction prices surrounding the district may also affect the valuation, especially for those buildings with less historical transaction data

5) Economic situation:

- It is no doubt that the economic situation, no matter downturn, interest rate, or other cases, will affect purchase intention and somehow cause impact the real estate market

6) Government policy:

- Include but not only to new tax arrangements, purchase regulations and etc

When a buyer applies for a mortgage, a bank will appoint a designated surveyor to assess the valuation of the property. If the value is lower than the transaction price, the bank may adopt the valuation price for the mortgage loan amount calculation.

Remember, the property value defines the mortgage amount!

For example, if a person bought a house with a transaction price of $7,000,000, and he applied for a mortgage with a loan-to-value ratio (LTV) of 90%, the loan amount is $6,300,000. However, if the value of the property is only $6,800,000, the bank will adopt the lower one and the ultimate loan amount will be adjusted to $6,120,000 ($6,800,000 x 90%). The borrower needs to pay an extra $180,000 for the transaction. If the buyer cannot afford the price, he/ she may need to forfeit the deposit.

But in some cases, the case can be avoided by using an experienced mortgage agency for the mortgage application. Usually, a mortgage agency will analyze the case with data and situation and use their expertise and connections to help buyers complete the deal successfully, with 95% applicant success with mReferral’s FREE helping hand already.

mReferral offers a free valuation service with different banks for borrowers. Before signing the sales and purchase agreement, you can contact our mReferral team directly for valuation. You may also fill in the form of property valuation, with the information of property type, address and personal information, our mortgage professionals will contact you shortly.

Moreover, banks like HSBC, Standard Chartered, Hang Seng, BOC, DBC, ICBC, BEA also provide online property valuation for reference, but if buyer is going to confirm the deal, highly recommend contacting us before, in order to avoid potential risks.

If you want to learn more information about mortgage or need help from our mReferral mortgage team, please feel free to reach us at 3196-6688.