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Home loans made clear

The black art of land valuations

By AG Canberra - 20 August 2008 19

Looking for some help from RiotActers before start making calls to the toy government.

Got my rates notice yesterday and have seen a huge jump in the unimproved value of my block of land.

Here are the details
Chisholm, 800m2 block, basic 3 bedroom 120m2 house on it.
Past three ULV’s
2006 – 151k
2007 – 160k
2008 – 192k

I know this jump doesn’t amount to too much in my rates but I’d like to know exactly how they arrive at the figure. And why the huge jump this year? If as it says on the info sheet they have to go on past house sales for the area, then remove the cost of putting the house on the block – can I assume that house prices in sunny Chisholm have jumped exactly 20%?

If anyone has had experience with disputing the valuation I’d be keen to hear how it went.

Thanks

What’s Your opinion?


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19 Responses to
The black art of land valuations
teepee 10:54 pm 20 Aug 08

Gungahlin Al is spot on. The constricted land supply is partly aimed at squeezing maximum revenue from new home buyers. But the wider effect is that it squeezes higher rates from all home owners because their land value rises in line with what new blocks of land are doing. I wonder which revenue bucket has risen more in recent years in percentage terms – rates or stamp duty receipts?

When I first came to Canberra prices of land were stable so the ACT Govt would hitch rates up deliberately and everyone would notice. Now they do it indirectly through land prices – much more cunning.

barking toad 5:58 pm 20 Aug 08

The mayor needs the extra cash to pay for pretend windmills and other projects to con the punters before the election.

Woody Mann-Caruso 2:09 pm 20 Aug 08

ULVs don’t always rise. Mine stayed steady from 2006 to 2007, then rose again this year. The same seems to have happened with Holden in 2005-06, following a drop in 2004. So much for ‘it’s a government conspiracy to steal money year after year’.

ULVs also don’t have a lot to do with sale prices. What kind of house is on it? What are your neighbours like? What are you close to – schools, shops? What’s your landscaping like? You could have a huge ULV (because you have a large block like I do) but get a rubbish price at sale because it looks like a tip (like mine kinda does, but I’ll get the mower out this weekend, I promise).

Gungahlin Al 1:20 pm 20 Aug 08

As I’ve said before, government keeps land supply very tight. At same time government (via LDA) spends millions advertising land releases, even though they already have more than enough buyers on their waiting lists. Thus driving up demand. Then get ‘independent valuer’ to advise on prices of new land. Adviser says “there is pent up demand that is driving up prices, therefore prices on next land sale should be set higher.” With vacant land prices higher, house prices follow. Costs go up, rents go up, rates go up.

Meanwhile land ballot process is changed to ‘short-list’ ballot candidates, thereby avoiding ugly embarrassing news coverage of 500 angry people being turned away empty handed. Dissipated anger is harder to report on than concentrated anger…

Holden Caulfield 12:50 pm 20 Aug 08

But then so did house prices.

(Apologies for being a three post nutbag.)

Holden Caulfield 12:49 pm 20 Aug 08

Holden Caulfield said :

Our block dropped $36k from 2004 to 2005, and remained constant in 2006.

Mind, it did rise sharply from 1999, haha…

1999 – $106K
2000 – $160K (+51%)
2001 – $160K
2002 – $204K (+27.5%)
2003 – $286K (+40%)
2004 – $367K (+28%)
2005 – $331K (-10%)
2006 – $331K
2007 – $365K (+10%)

Holden Caulfield 12:41 pm 20 Aug 08

AG Canberra said :

So is that all they really take into account – current house price increases? And can anyone remember when a ULV went down?

Our block dropped $36k from 2004 to 2005, and remained constant in 2006.

Thumper 12:39 pm 20 Aug 08

So do I Holden, but will they?

Holden Caulfield 12:39 pm 20 Aug 08

@Thumper, I would expect the values to drop marginally when our next valuations arrive in 2009.

AG Canberra 12:37 pm 20 Aug 08

So is that all they really take into account – current house price increases? And can anyone remember when a ULV went down?

Thumper 12:35 pm 20 Aug 08

It’s simple.

Government increases your ULV by use of a black cauldren and the eye of newt and you pay more money.

If anything ULV should be going down at present with the stagnation and uncertainty in the current market.

Holden Caulfield 12:34 pm 20 Aug 08

I do believe there was a stat somewhere that said house prices in Canberra rose by 17% in 2007.

IIRC your rates are calculated by averaging the unimproved value from the last two years, and given house prices probably went up a healthy 10%+ in 2006 as well then the rise is probably defendable.

Our unimproved land value (inner north) is still $2K less than it was when we bought in 2004, although it did go up to $365K this year, from $331K the year prior. So it’s not like the values for rates purposes never drop either.

verbalkint 12:24 pm 20 Aug 08

perhaps the increase in house prices is exactly why there are more houses for sale?

someone sees their neighbours place go for a nice fat wad of cash and they think they can jump in while the market is high…

Our rates in Ainslie jumped by about 18% this year as well.

Sammy 12:16 pm 20 Aug 08

I’ve never seen more houses for sale as is currently the situation in Chisholm, so I would seriously doubt values have increased that much in the last year.

jakez 12:11 pm 20 Aug 08

I know somebody else had a problem with their land valuation in a Thread in the last fortnight. Might be worth checking that out as I believe it was valued just above some threshold that meant the person had to pay more.

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