Bala Curve with Example

The Bala's Curve is one of the most important and official formula in evaluating the value of a home given its year of lease left in Singapore. The URA website even officially reference it (even though SLA is the main user) and it is known to dip gradually before dropping really fast as the home aged.

While it was believed a SLA officer with the name Bala came up with the curve, I think there is another possibility that it was referencing to degradation curve found in manufacturing or production.

That's said, I realized that there are some peculiar years even though it is modeled as a simple log curve.  

1. Year 1 (3.8%):

   • Year 1 shows a significant drop in the percentage left compared to the rest of years (even more than the last few years)
   • However, prices of actual home prices usually go up rather than down

2. Year 68 (0.9%):

   • Year 68 stands out with a relatively higher percentage drop compared to 0.6% and 0.3% in the nearby years
   • That said if you take an average of 0.3% and 0.9%, it is actually still 0.6% as per the trend. This was a very odd adjustment and likely to give an impression that houses after 30 year mark would dip (though it didn't really dip at same rate in the next year)

3. Year 87 (0.4%):

   • Year 87 shows the first break in the linear decline (year 87 was somehow higher than year 86 and year 88 of 3%)
   • This curve might be simplified to remove decimal and then it decline more in certain year. This concept would be similar to leap year where an extra day was calculated every 4 years.

4. Year 99 (4%):

   • Year 99 shows a significant drop in the percentage left compared to the rest of years (even more than the last few years of 3.7%)
   • However, prices of actual home prices usually go up rather than down so

I couldn't find anyone listing the values in the table so I extracted it out (in case it could be useful for future analysis of landed homes).