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).

Year Left % Left $PSF Left (Starting at $1,000) Diff (in PSF)
1 3.8 38 37
2 7.5 75 34
3 10.9 109 32
4 14.1 141 30
5 17.1 171 28
6 19.9 199 28
7 22.7 227 25
8 25.2 252 25
9 27.7 277 23
10 30 300 22
11 32.2 322 21
12 34.3 343 20
13 36.3 363 19
14 38.2 382 18
15 40 400 18
16 41.8 418 16
17 43.4 434 16
18 45 450 16
19 46.6 466 14
20 48 480 15
21 49.5 495 13
22 50.8 508 13
23 52.1 521 13
24 53.4 534 12
25 54.6 546 12
26 55.8 558 11
27 56.9 569 11
28 58 580 10
29 59 590 10
30 60 600 10
31 61 610 9
32 61.9 619 9
33 62.8 628 9
34 63.7 637 9
35 64.6 646 8
36 65.4 654 8
37 66.2 662 8
38 67 670 7
39 67.7 677 8
40 68.5 685 7
41 69.2 692 6
42 69.8 698 7
43 70.5 705 7
44 71.2 712 6
45 71.8 718 6
46 72.4 724 6
47 73 730 6
48 73.6 736 5
49 74.1 741 6
50 74.7 747 5
51 75.2 752 5
52 75.7 757 5
53 76.2 762 5
54 76.7 767 6
55 77.3 773 6
56 77.9 779 6
57 78.5 785 5
58 79 790 5
59 79.5 795 5
60 80 800 6
61 80.6 806 6
62 81.2 812 6
63 81.8 818 6
64 82.4 824 6
65 83 830 6
66 83.6 836 6
67 84.2 842 3
68 84.5 845 9
69 85.4 854 6
70 86 860 5
71 86.5 865 5
72 87 870 5
73 87.5 875 5
74 88 880 5
75 88.5 885 5
76 89 890 5
77 89.5 895 5
78 90 900 5
79 90.5 905 5
80 91 910 4
81 91.4 914 4
82 91.8 918 4
83 92.2 922 4
84 92.6 926 3
85 92.9 929 4
86 93.3 933 3
87 93.6 936 4
88 94 940 3
89 94.3 943 3
90 94.6 946 2
91 94.8 948 2
92 95 950 2
93 95.2 952 2
94 95.4 954 2
95 95.6 956 1
96 95.7 957 1
97 95.8 958 1
98 95.9 959 1
99 96 960 40

 

Author
Sky Hoon. Read Full Bio
Website Owner, Twitter-er
He has been trading since 2008. He started this blog to share the journey about option trading. He dabbled in stocks, bitcoin, ethereum (in Celsius Network), ETF (lazy Dollar Cost Averaging) and also built websites for fun. He used this as a platform to share my experiences and mistakes in trading, especially options which I just picked up.

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