Valuation Accuracy - A Problematic Enquiry

Criticisms from within and without the appraisal fraternity have led to a quest for ìaccurateî valuations. Studies that hitherto have been done on the issue have given conflicting results. While some studies (e.g. Drivers Jonas/IPD, 1988, 1990, 1992 & 1997; Brown 1985 & 1992) have found valuations to be ìaccurateî, others (e.g. Hager and Lord, 1985; Lizieri and Venmore-Roland, 1991) give contrary conclusions. Those who question the accuracy of valuations have used statistical methods to prove valuation error, bias, etc. Using existing criteria for measuring valuation ìaccuracyî, and data from Singapore, this paper replicates the finding of valuation error, bias, etc to some extent. However, it is argued both theoretically and empirically (with examples where possible) that the criteria for determining ìaccuracyî is highly questionable consequent on which the valuation error, bias, etc conclusion could be seriously flawed. The paper concludes that in view of the appraisal foundations, theory of value, and the nature of the property market, it may be more rewarding to concentrate on ways and means of reducing valuation variation. It is cautioned, however, that the resulting reduction may be very moderate.