The black art of land valuations

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

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.

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?

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.

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.

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

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).

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…

But then so did house prices.

(Apologies for being a three post nutbag.)

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%)