The black art of land valuations

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.


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19 Responses to The black art of land valuations
AG Canberra AG Canberra 11:48 am 22 Aug 08

Oh and they could not provide one clear reason to justify the 20% jump this year.

AG Canberra AG Canberra 11:46 am 22 Aug 08

OK – here’s a bit of info gleaned from the Australian Valuation Office – the guys tasked with coming up with these valuations…

I shouldn’t compare this year to last as it’s all relative.

To determine land values in Chisholm they considered land sales in Calwell, Bonython and Banks. They also considered house sales in Chisholm.

I should be happy that they have decided my land is worth more than last year.

Even if they decided that all land values should stay the same next year – the Gov will just up the percentage to recieve a greater return for rates.

They worked on approx $1400 per square meter for replacement building costs in Chisholm. This is then multiplied by the floor space of the house to arrive at a “dwelling” cost. they take this dwelling cost away from what they reckon I can sell the house for to arrive at what the ULV is.

As I said – it’s all a black art.

Gungahlin Al Gungahlin Al 9:55 am 21 Aug 08

Yes Captain – that is a serious issue, and at the core I reckon of why the builders get preferable treatment during the sales and special ballots with job lots, etc. See my comments before on the over the counter land sales farce a couple of weeks ago.

The spin off from that though is that people end up with builder pulp housing, instead of designs to suit the block and owners for better passive solar etc. It would be a very interesting PHD study to quantify the greenhouse impact that results from builder-generated housing stock vs owner generated…

So is there a party out there prepared to guarantee stamp duty on the land component only??? To deliberately remove the tools be which they can rort the community?

captainwhorebags captainwhorebags 9:09 am 21 Aug 08

teepee: stamp duty is another reason behind the willingness to sell blocks directly to builders, locking potential new land buyers into a particular building company.

If you buy land directly from the govt, you pay stamp duty on the land. You don’t have to pay stamp duty on the house when you build.

If you buy a house and land package, you pay stamp duty on the full amount. The government has a vested interest in selling directly to builders.

teepee 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 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 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 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 Holden Caulfield 12:50 pm 20 Aug 08

But then so did house prices.

(Apologies for being a three post nutbag.)

Holden Caulfield 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 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 Thumper 12:39 pm 20 Aug 08

So do I Holden, but will they?

Holden Caulfield 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 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 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 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 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 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 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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