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Another wonder – another Dickson auction

By Paul Costigan - 17 April 2017 21

Costigan-Dickson0

House sales stories are all over the media. So here’s another with some local flavour – being very much linked to my former post on a Dickson Auction earlier this year.

It was 1pm Wednesday 12th April when locals fronted up to an auction for another very standard 1960s 3-bedroom house that had not been renovated. The décor had been played with – but nothing structural.

The décor was such that it would not appeal to many contemporary buyers.

Whereas the former was presented mostly white throughout, this new one had its own ‘special’ flavour. There was a bit too much wood for my taste – and a small bedroom with a wall of mirrors. Hmm!

And that lovely wallpaper. And don’t you just love that tiny retro work desk. And of course – the agent’s bowl of fruit in the kitchen was going to make all the difference!

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Any new owners would have to be thinking about an instant redecoration. But nothing required if it were to go to rent it out for a while.

If after the auction you had money in your pocket – and wanted a smallish house –and were to prepared to strip out and modernise – then this could have been just the thing to get you into the inner north.

And for added pressure – we heard that as this was being sold, that there were no other stand-alone houses for sale in Dickson – apartments yes – but no other houses.

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The garden had been worked over – tidied up – so you could live with it for a while and do changes gradually. I did like the agent’s placement of little pots of flowers – with a lonely one in the front garden just for good measure. Sure to bring in more buyers.

The big selling points were that this future home was on a corner of tree lined quiet streets in this inner suburb, close to several schools and shops and was two houses from the wetlands (free range dog park for many). So the location was wonderful (location – location etc).

And – if you wished – there was plenty of scope for extra additions/renovations – having a generous back-yard.

The former sale was a three bedroom basic, was plain, had a minimum garden and was a couple of streets away from today’s auction. That sale had surprised locals when it went for a cool $905,000. The new owners are in and nothing has changed – so far.

Back to today’s auction.

The bidding got under way and stalled around $850K with just two bidders. I could see several other registered bidders, but none of them made any moves. Oh yes – all waiting to jump at the end maybe.

The owners apparently gave the nod that this price, around $850K was very acceptable. So the auctioneer, being Mr Luton himself, pushed on with the sale now guaranteed.

The pressure was being directed big time at the second bidder – with the auctioneers and the local agent pushing him incrementally on. Meanwhile, in the other corner, the other bidder remained very calm and simply added more as the former gave in and put in a bid.

No other bidders were joining in. So it was down to just those two.

Costigan-Dickson

Then it was all over!

Again it went for a cool $905,000. The owners were smiling! And why not – that’s better than the predicted high of $800K – $850K. So those potted flowers and the bowl of apples were worth it!

Locals were surprised  – again. While it is not a ‘record’ or a stunning price – it is a high price for a very ordinary 3-bedroom basic house.

And for the local residents – it confirms, based on these two house sales of very similar standard, that this is now the lowest price for a three bedroom stock house within Dickson’s inner tree lined streets. Houses on the busier street on the edges, along Majura Ave etc, are bringing it a little less.

As for the buyer – I could not tell. She was alone and looked like an agent herself. I can only speculate. She was cool – was not flustered at all by the price. I wonder how high she would have gone.

We have to wait to see whether a bulldozer appears, or the tradies arrive to do a make-over for a household – or is it an investment?

And full marks to the auctioneer – he got a good deal for the buyers.

And the locals all returned home to speculate on their own properties.

Anyone for Goulburn?

What’s Your opinion?


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21 Responses to
Another wonder – another Dickson auction
1
Masquara 12:39 pm
17 Apr 17
#

You might tone down your sarcasm a bit regarding the flower pots etc. This house belonged to a much-loved couple, the Lloyds. Vince and Brenda Lloyd lived in the house as a rental guvvie and it took them over a decade to be able to buy it. They raised three kids in the house. After his wife pre-deceased him, Vince lived on to 90 and was nursed in the home full-time for the last few months by his three kids, who didn’t want to put him in a nursing home. The Lloyds had lots of flower pots, and yes, even an old wheelbarrow filled with flowers. And classical scenes in plaster around their little pergola thing. And plaster frogs around the pond in the back yard. If the real estate agents had wanted to tizz the place up for a hipster buyer, they would not have kept the Lloyds’ honest working-class aesthetic all over the house. You can call it kitsch if you want. It was a house full of love, and no doubt the new owners will sense it and refrain from echoing Paul’s lofty disdain for the Lloyds’ garden ornaments.

2
planeguy 4:07 pm
17 Apr 17
#

Interesting – I would say the seller would be very happy with that price, and shows that the RZ1 areas of the inner north are desirable, even with blocks that can’t be sub-divided (without merging leases).

Masquara – I wouldn’t take Paul’s comments too seriously – despite your affection for the couple, most people don’t know them, and hence the presentation of the house will be open for comment by all who have seen it. It is important to remember that a house once put on the market for sale, stops being a home, and becomes a faceless asset being sold.

3
Paul Costigan 6:18 pm
17 Apr 17
#

Absolutely no disrespect was meant towards the former owners.

The house internally was definitely in an older style that many contemporary buyers would baulk at – (not me) as they tend to look for that wonderful all-white clean look. And I heard as much on the day from others on site for the sale.

I say this having differed with a potential buyer who did not like the style at all; whereas I put forward that the house would be a good buy. Alas, the price quickly excluded them.

About the agent’s touches – I have this running joke with a former agent of this same firm about such bowls of fruit. As for most of the other stuff you mentioned – I did not. It was indeed a very much-loved house – and it looked that way when sold – and I have walked past it for years and so had already observed that.

A lot could be written about the emotional investment people have in houses – that is their homes – rather than just being an ‘investment’. For instance my mother’s house was wonderful – weatherboard on solid brick 1940s style – and in good condition (new paint etc) – but to my horror – the new owners stripped off all the weatherboard and replaced it with blue-board and cheap grey painted render. No Respect!

Meanwhile – locally there’s more of a similar vintage soon to come on the market – interesting to see how they go. Watch this space.

4
Paul Costigan 9:16 pm
17 Apr 17
#

and correction:

I meant – Full marks to the auctioneer – he got a good deal for the ‘sellers’ – (not buyers)

5
John Moulis 10:21 am
18 Apr 17
#

Paul Costigan said :

Absolutely no disrespect was meant towards the former owners.

A lot could be written about the emotional investment people have in houses – that is their homes – rather than just being an ‘investment’. For instance my mother’s house was wonderful – weatherboard on solid brick 1940s style – and in good condition (new paint etc) – but to my horror – the new owners stripped off all the weatherboard and replaced it with blue-board and cheap grey painted render. No Respect!

Meanwhile – locally there’s more of a similar vintage soon to come on the market – interesting to see how they go. Watch this space.

Letting go of your childhood home is hard, I’m just going thru that now. For the first time a home I’ve lived in, in my 58 years on the earth is being sold to someone outside the family. The house in Sydney where I lived from birth to the age of 11 has just been sold. It has essentially been kept the way it was until we moved here in 1970 but now we will have no control over it. I hope the new owners don’t wreck it, it was a good house where three kids grew up.

6
bj_ACT 3:33 pm
18 Apr 17
#

This sale again highlights the inequity of the ACT Governments shift from Stamp Duty on sale price to Land Rates based on unimproved value. This House in the story just sold for $905,000 and pays annual rates of $2,833 per year based on their 720sqm block. Another Sale in Mc’conell St Kambah of a 1100sqm block has an annual rates bill of $2150 per year.

How can one family have a house and land that is worth 200% of another persons in Canberra, yet the lower value household pays 75% of the annual rates of the more expensive household. The new purchaser in Dickson also saved money by paying less stamp duty then they would have over the old system.

This new Rates system that Labor bought in continues to hit poorer families with lower value housing assets in outer suburbs, proportionally harder than inner city growth areas. The inner areas are getting the benefits in asset gain whilst the ACT Government taxes are being paid for by outer areas of Tuggeranong, West Belconnen, Gunghalin etc.

The Government needs to completely redistribute the new annual Rates system across Canberra to ensure a fairer tax system. Currently the rates system designed by former ACT Labor treasurer Ted Quinlan helps people like himself who live in Deakin by being the reverse of the income tax system. You pay a higher percentage in Rates the lower the value of your land.

Imagine if our income tax scales got lower the more you earned? 48% tax for those earning under a $100k, but then the income tax rates drops to 30% for those earning higher incomes.

7
dungfungus 8:45 pm
18 Apr 17
#

bj_ACT said :

This sale again highlights the inequity of the ACT Governments shift from Stamp Duty on sale price to Land Rates based on unimproved value. This House in the story just sold for $905,000 and pays annual rates of $2,833 per year based on their 720sqm block. Another Sale in Mc’conell St Kambah of a 1100sqm block has an annual rates bill of $2150 per year.

How can one family have a house and land that is worth 200% of another persons in Canberra, yet the lower value household pays 75% of the annual rates of the more expensive household. The new purchaser in Dickson also saved money by paying less stamp duty then they would have over the old system.

This new Rates system that Labor bought in continues to hit poorer families with lower value housing assets in outer suburbs, proportionally harder than inner city growth areas. The inner areas are getting the benefits in asset gain whilst the ACT Government taxes are being paid for by outer areas of Tuggeranong, West Belconnen, Gunghalin etc.

The Government needs to completely redistribute the new annual Rates system across Canberra to ensure a fairer tax system. Currently the rates system designed by former ACT Labor treasurer Ted Quinlan helps people like himself who live in Deakin by being the reverse of the income tax system. You pay a higher percentage in Rates the lower the value of your land.

Imagine if our income tax scales got lower the more you earned? 48% tax for those earning under a $100k, but then the income tax rates drops to 30% for those earning higher incomes.

This is an excellent observation bj_ACT.
It should be the job of promulgating criticism that has been lacking from the Canberra Liberals who were on the money in 2012 with the “triple the rates” campaign but since the 2016 election they appear to have gone missing.

8
chewy14 10:59 am
19 Apr 17
#

bj_ACT said :

This sale again highlights the inequity of the ACT Governments shift from Stamp Duty on sale price to Land Rates based on unimproved value. This House in the story just sold for $905,000 and pays annual rates of $2,833 per year based on their 720sqm block. Another Sale in Mc’conell St Kambah of a 1100sqm block has an annual rates bill of $2150 per year.

How can one family have a house and land that is worth 200% of another persons in Canberra, yet the lower value household pays 75% of the annual rates of the more expensive household. The new purchaser in Dickson also saved money by paying less stamp duty then they would have over the old system.

This new Rates system that Labor bought in continues to hit poorer families with lower value housing assets in outer suburbs, proportionally harder than inner city growth areas. The inner areas are getting the benefits in asset gain whilst the ACT Government taxes are being paid for by outer areas of Tuggeranong, West Belconnen, Gunghalin etc.

The Government needs to completely redistribute the new annual Rates system across Canberra to ensure a fairer tax system. Currently the rates system designed by former ACT Labor treasurer Ted Quinlan helps people like himself who live in Deakin by being the reverse of the income tax system. You pay a higher percentage in Rates the lower the value of your land.

Imagine if our income tax scales got lower the more you earned? 48% tax for those earning under a $100k, but then the income tax rates drops to 30% for those earning higher incomes.

The block in Kambah is 50% bigger than the Dickson one (also sold 1 year ago). On a per metre valuation of block size, the Dickson house is paying 2 times as much for their rates as the Kambah one.

Even so, this ignores the actual reasons why the Dickson block has sold for so much as compared to the Kambah one.

On land valuation, Kambah sold $100k above land value, whereas the Dickson house has sold $400k above.

Do you think the value of the house is $300k more or are the purchasers in Dickson seeing other market forces (a tram) at play? And as the unimproved land valuation is actually calculated partly using sales results, what you’ll actually see is the Dickson land valuations catch up over the next few years because of sales like this, resulting in the new owners paying significantly higher rates. What you’ve identified isn’t a problem with rates calculations, it’s the effect of government spending on property values in a specific area, for which land valuations haven’t caught up yet.

Very nice for existing owners to be given such a gift in capital value from public funds though isn’t it.

9
planeguy 11:23 am
19 Apr 17
#

bj_ACT said :

This sale again highlights the inequity of the ACT Governments shift from Stamp Duty on sale price to Land Rates based on unimproved value. This House in the story just sold for $905,000 and pays annual rates of $2,833 per year based on their 720sqm block. Another Sale in Mc’conell St Kambah of a 1100sqm block has an annual rates bill of $2150 per year..

bJ_ACT – I strongly disagree with you.

Lets start with this block – rates of $2833 for 727m2 of land. That is $3.89 per m2 per year.
The Kambah example you used – $2150 for 1100sqm is $1.95 per m2, or half the price.

So in simple terms, the Dickson person is paying twice as much for their land than the Kambah person.

Now, the Dickson place has an Unimproved Value of $496,000 this year. I have trolled the Allhomes sales data and can’t find a match for a 100m2 block in McConnel Cres that has $2150 rates, but have found some similarly large blocks for $2250 rates, that sold in the $500,000 range. They have a UV of $360ish, which means that the ratio of rates to UV is about the same between each block.

Now, I personally believe that rates based on Unimproved Value, is much better that on Improved value – two houses next to each other on same size blocks should not pay different rates because one of them has renovated, and one hasn’t. The asset the government is taxing is not your own home, but the land it rests on – the scarce resource.

Next, Paul no-doubt chose to write about this property, because even to someone watching the local market, a price of 905k surprised him (I would have expected 780-810k range personally from my brief review of allhomes). This variation in sale price (and expectations) is another reason why improved value is a poor indicator, compared to Land valuations.

Finally, the ratio of rates on one place compared to another has generally not changed that much with the move from stamp duty to rates – the quantum has, but your argument isn’t about the $700 difference, it is based on a “75% of the rates for half the house and land value”.

10
bj_ACT 12:38 pm
19 Apr 17
#

planeguy said :

bj_ACT said :

This sale again highlights the inequity of the ACT Governments shift from Stamp Duty on sale price to Land Rates based on unimproved value. This House in the story just sold for $905,000 and pays annual rates of $2,833 per year based on their 720sqm block. Another Sale in Mc’conell St Kambah of a 1100sqm block has an annual rates bill of $2150 per year..

bJ_ACT – I strongly disagree with you.

Lets start with this block – rates of $2833 for 727m2 of land. That is $3.89 per m2 per year.
The Kambah example you used – $2150 for 1100sqm is $1.95 per m2, or half the price.

So in simple terms, the Dickson person is paying twice as much for their land than the Kambah person.

Now, the Dickson place has an Unimproved Value of $496,000 this year. I have trolled the Allhomes sales data and can’t find a match for a 100m2 block in McConnel Cres that has $2150 rates, but have found some similarly large blocks for $2250 rates, that sold in the $500,000 range. They have a UV of $360ish, which means that the ratio of rates to UV is about the same between each block.

Now, I personally believe that rates based on Unimproved Value, is much better that on Improved value – two houses next to each other on same size blocks should not pay different rates because one of them has renovated, and one hasn’t. The asset the government is taxing is not your own home, but the land it rests on – the scarce resource.

Next, Paul no-doubt chose to write about this property, because even to someone watching the local market, a price of 905k surprised him (I would have expected 780-810k range personally from my brief review of allhomes). This variation in sale price (and expectations) is another reason why improved value is a poor indicator, compared to Land valuations.

Finally, the ratio of rates on one place compared to another has generally not changed that much with the move from stamp duty to rates – the quantum has, but your argument isn’t about the $700 difference, it is based on a “75% of the rates for half the house and land value”.

Your missing the point. The size of the blocks value per sqm is artificial as the street network, land and planning laws as well as demand doesn’t allow the outer suburb blocks to be developed to the degree as inner city blocks where the Government is focussing its infrastructure and public facility spend.

If you can’t see that higher value inner suburb land should be paying proportionally higher land rates than under the current models design, then I can’t help you. I think your argument that the Kambah house only has added 100k to the ‘rates calculated and charged’ unimproved land value actually highlights the point I am trying to make. The current Rates model is not accurately reflecting the real value of properties and therefore not charging residents fairly. There are hundreds of similar examples across Kambah, Wanniassa etc of all different size blocks and sales amounts that don’t add up when compared to the rates charges for flashy houses in O’Connor and Dickson etc.

Stamp Duty on the sale of the house used to get more money for Government the more expensive the build. Now the ACT Government have moved to tax the land value regardless of the huge mansion or small subdued house that is built on the same land. Compare a few hundred property sales and rates charges across Canberra over the last 2 years and you will see that charges and rates are not equally distributed in comparison to home asset values, infrastructure and government services provided.

I go back to my Income tax example and think that most Australians agree that the richer should pay taxes at a higher proportion than the poorer, not the other way round.

I also think the ACT Government’s base Rates charge per household of $765 plus the emergency levies and family violence charges are also hitting poorer families harder than richer ones. But that might be an argument for another day.

11
dungfungus 1:09 pm
19 Apr 17
#

chewy14 said :

bj_ACT said :

This sale again highlights the inequity of the ACT Governments shift from Stamp Duty on sale price to Land Rates based on unimproved value. This House in the story just sold for $905,000 and pays annual rates of $2,833 per year based on their 720sqm block. Another Sale in Mc’conell St Kambah of a 1100sqm block has an annual rates bill of $2150 per year.

How can one family have a house and land that is worth 200% of another persons in Canberra, yet the lower value household pays 75% of the annual rates of the more expensive household. The new purchaser in Dickson also saved money by paying less stamp duty then they would have over the old system.

This new Rates system that Labor bought in continues to hit poorer families with lower value housing assets in outer suburbs, proportionally harder than inner city growth areas. The inner areas are getting the benefits in asset gain whilst the ACT Government taxes are being paid for by outer areas of Tuggeranong, West Belconnen, Gunghalin etc.

The Government needs to completely redistribute the new annual Rates system across Canberra to ensure a fairer tax system. Currently the rates system designed by former ACT Labor treasurer Ted Quinlan helps people like himself who live in Deakin by being the reverse of the income tax system. You pay a higher percentage in Rates the lower the value of your land.

Imagine if our income tax scales got lower the more you earned? 48% tax for those earning under a $100k, but then the income tax rates drops to 30% for those earning higher incomes.

The block in Kambah is 50% bigger than the Dickson one (also sold 1 year ago). On a per metre valuation of block size, the Dickson house is paying 2 times as much for their rates as the Kambah one.

Even so, this ignores the actual reasons why the Dickson block has sold for so much as compared to the Kambah one.

On land valuation, Kambah sold $100k above land value, whereas the Dickson house has sold $400k above.

Do you think the value of the house is $300k more or are the purchasers in Dickson seeing other market forces (a tram) at play? And as the unimproved land valuation is actually calculated partly using sales results, what you’ll actually see is the Dickson land valuations catch up over the next few years because of sales like this, resulting in the new owners paying significantly higher rates. What you’ve identified isn’t a problem with rates calculations, it’s the effect of government spending on property values in a specific area, for which land valuations haven’t caught up yet.

Very nice for existing owners to be given such a gift in capital value from public funds though isn’t it.

It’s nice only if the owners aren’t speculators or people with insider knowledge.

12
chewy14 3:45 pm
19 Apr 17
#

bj_ACT said :

planeguy said :

bj_ACT said :

This sale again highlights the inequity of the ACT Governments shift from Stamp Duty on sale price to Land Rates based on unimproved value. This House in the story just sold for $905,000 and pays annual rates of $2,833 per year based on their 720sqm block. Another Sale in Mc’conell St Kambah of a 1100sqm block has an annual rates bill of $2150 per year..

bJ_ACT – I strongly disagree with you.

Lets start with this block – rates of $2833 for 727m2 of land. That is $3.89 per m2 per year.
The Kambah example you used – $2150 for 1100sqm is $1.95 per m2, or half the price.

So in simple terms, the Dickson person is paying twice as much for their land than the Kambah person.

Now, the Dickson place has an Unimproved Value of $496,000 this year. I have trolled the Allhomes sales data and can’t find a match for a 100m2 block in McConnel Cres that has $2150 rates, but have found some similarly large blocks for $2250 rates, that sold in the $500,000 range. They have a UV of $360ish, which means that the ratio of rates to UV is about the same between each block.

Now, I personally believe that rates based on Unimproved Value, is much better that on Improved value – two houses next to each other on same size blocks should not pay different rates because one of them has renovated, and one hasn’t. The asset the government is taxing is not your own home, but the land it rests on – the scarce resource.

Next, Paul no-doubt chose to write about this property, because even to someone watching the local market, a price of 905k surprised him (I would have expected 780-810k range personally from my brief review of allhomes). This variation in sale price (and expectations) is another reason why improved value is a poor indicator, compared to Land valuations.

Finally, the ratio of rates on one place compared to another has generally not changed that much with the move from stamp duty to rates – the quantum has, but your argument isn’t about the $700 difference, it is based on a “75% of the rates for half the house and land value”.

Your missing the point. The size of the blocks value per sqm is artificial as the street network, land and planning laws as well as demand doesn’t allow the outer suburb blocks to be developed to the degree as inner city blocks where the Government is focussing its infrastructure and public facility spend.

If you can’t see that higher value inner suburb land should be paying proportionally higher land rates than under the current models design, then I can’t help you. I think your argument that the Kambah house only has added 100k to the ‘rates calculated and charged’ unimproved land value actually highlights the point I am trying to make. The current Rates model is not accurately reflecting the real value of properties and therefore not charging residents fairly. There are hundreds of similar examples across Kambah, Wanniassa etc of all different size blocks and sales amounts that don’t add up when compared to the rates charges for flashy houses in O’Connor and Dickson etc.

Stamp Duty on the sale of the house used to get more money for Government the more expensive the build. Now the ACT Government have moved to tax the land value regardless of the huge mansion or small subdued house that is built on the same land.

Compare a few hundred property sales and rates charges across Canberra over the last 2 years and you will see that charges and rates are not equally distributed in comparison to home asset values, infrastructure and government services provided.

I go back to my Income tax example and think that most Australians agree that the richer should pay taxes at a higher proportion than the poorer, not the other way round.

I also think the ACT Government’s base Rates charge per household of $765 plus the emergency levies and family violence charges are also hitting poorer families harder than richer ones. But that might be an argument for another day.

But they do pay a higher fee % based on the AUV calculation exactly the same as income tax:

https://www.revenue.act.gov.au/duties-and-taxes/rates/rates-calculation

And the government can’t and shouldn’t tax the improved value of the land because it would create a perverse incentive for people to devalue their properties to pay less tax, which is not in anyway a good idea from an economic or city growth perspective.

13
planeguy 8:12 pm
19 Apr 17
#

bj_ACT said :

Your missing the point. The size of the blocks value per sqm is artificial as the street network, land and planning laws as well as demand doesn’t allow the outer suburb blocks to be developed to the degree as inner city blocks where the Government is focusing its infrastructure and public facility spend.

Actually, I disagree, and believe you are missing the point. Those factors you mention are directly applicable to the Unimproved Value of the Land, and why a 727m2 block in Dickson has a UV of 496k ($682/m2) compared to your example Kambah block (1100m2 with UV of 360 gives $327/m2) Thus the land in Kambah is assessed at 2.1x less valuable than the land in Dickson.

The Kambah land also has the advantage (assuming it is RZ1 like the Dickson block) of being able to be subdivided as it is greater than 800m2 – something that the Dickson block can’t be. If the Kambah block is something other than RZ1, then its size becomes an even bigger financial advantage.

Now, there may be some merit to you claiming that perhaps the Dickson block’s UV is undervalued, given the discrepancy between sale price and UV, but that does not change the arguments re Stamp Duty vs Rates.

14
bj_ACT 10:46 am
20 Apr 17
#

Thanks Chewy14, but I know how the Land Rates tax very slowly sliding scale is calculated. That is not the issue I am complaining about (but I think the brackets should be steeper). It is the consistently poor way the Land Value calculation in outer suburbs is made of the Unimproved Asset that I have the issue with and that the impact of the tax shift from Improved Value to Unimproved Value of the Land was not properly catered for in model.

This approach (along with the one size fits all base charges and levies that make up a proportion of annual rates) has changed the way the Government collects payments from homeowners in Canberra. Any reasonable analysis of multiple Sales values will show that since the ACT Government changed the Rates model fees, the proportional calculations have not matched real land and house values evenly across Canberra. There are hundreds of examples where the correlation between rates paid and house sale values are not even and it is geographically based.
I think some correspondents here need go beyond the first layer of the onion and look a little deeper at the broader issue.
Let’s see if people can agree with these statements.
Stamp Duty (which is being slowly reduced by Government) is collected based on the overall value of both the house and land at sale. An expensive house sale pays more Stamp Duty than a cheaper house sale. So when Stamp Duty is reduced who gains more? My answer is the purchaser of the expensive house has had a bigger reduction in Stamp Duty than the purchaser of the cheaper house.
There are annual base Rates charges for every house no matter the value of a private home (Base charge, Safer Families levy, Emergency services levy $1047). Is this levy hitting poorer or richer homeowners harder? My answer is obviously poorer homeowners with lower value assets.
When ACT Government valuers assess the UAV they take into account the size of the block of land, location, aspect & view. Big blocks (often with unusable space) in outer suburbs such as is often the case in Tuggeranong & West Belconnen are not actually worth more because they are bigger. The views blocks had in Tuggeranong when built, have often disappeared over time due to trees etc. Are the valuers properly assessing the real value of ACT land and the real value of the house build on it.? I say that analysis of land values and home sales across Canberra show this is not the case.
As for some people on Riotact using per sqm land valuations, why do some houses in Kambah pay $4.50 psqm but houses on Mugga Red Hill only pay $3.20 per sqm. I know which sqm of land I would rather own.
There are other related issues as well, but I would encourage people to dig a little deeper than the high level concepts, web page descriptions of the charging model of the new rates system and reduction in Stamp Duty. You will see that the Rates Increases are hitting poorer homeowners harder than richer homeowners.

15
bj_ACT 1:37 pm
20 Apr 17
#

planeguy said :

bj_ACT said :

Your missing the point. The size of the blocks value per sqm is artificial as the street network, land and planning laws as well as demand doesn’t allow the outer suburb blocks to be developed to the degree as inner city blocks where the Government is focusing its infrastructure and public facility spend.

Actually, I disagree, and believe you are missing the point. Those factors you mention are directly applicable to the Unimproved Value of the Land, and why a 727m2 block in Dickson has a UV of 496k ($682/m2) compared to your example Kambah block (1100m2 with UV of 360 gives $327/m2) Thus the land in Kambah is assessed at 2.1x less valuable than the land in Dickson.

The Kambah land also has the advantage (assuming it is RZ1 like the Dickson block) of being able to be subdivided as it is greater than 800m2 – something that the Dickson block can’t be. If the Kambah block is something other than RZ1, then its size becomes an even bigger financial advantage.

Now, there may be some merit to you claiming that perhaps the Dickson block’s UV is undervalued, given the discrepancy between sale price and UV, but that does not change the arguments re Stamp Duty vs Rates.

You are actually highlighting one of the key issues I have been raising with the current land valuation methodology and rates calculations. Like in your example, the land valuation is taking into account the ‘potential’ of the large block size in outer Suburbs not the ‘actual value’ of the land and house as being paid for by house and land purchasers. You are on the right track, but need to dig deeper and think more broadly.

In theory you are correct that the big RZ1 Kambah block could be subdivided and is therefore worth more as Unimproved land. In reality however, the thousands of large RZ1 blocks in Kambah, Wanniassa and West Belconnen are not and often can not be sub-divided to realise the dollar value of each square meter of land. However as you suggest, they are paying higher rates based on this potential of a big block.

I searched through Sub Division Development applications (as best as I could through what’s publically available and excluding Mr Fluffy) and couldn’t find any RZ1 Kambah blocks over 800sqm that had been relatively recently approved for Sub Division (although I am sure there are a few amongst the over 1000 potential blocks in Kambah for RZ1 sub-division).

Currently these big (often diamond shaped with small street frontage) blocks in outer suburbs have basic 3 and 4 bedroom houses plonked roughly in the Centre of the block. Without the expense of tearing down the house, these blocks are not suited to sub-division. But the bigger issue is that the property value and infrastructure in outer suburbs is not high enough for home purchasers and investors to sub divide blocks and make money (unlike the large blocks in inner Canberra such as Downer & Dickson). Even a $100,000 extension on an outer Suburb house will not give you the ROI that it does for an inner city house.

I go back to my earlier example where Mugga Way Mansions are paying much less in annual land rates ‘per square meter’ than many Kambah homeowners to highlight that there is an issue in how the Government has heavily raised Annual Rates on unimproved land values whilst at the same time are reducing Stamp Duty on the improved land and house price.

I reckon some recent purchasers of expensive homes in inner Canberra have actually saved more money through their reduced Stamp Duty on the house purchase then they are paying in an extra 25% in Rates for a house worth almost twice as much as another purchaser bought at the same time in Charnwood.

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