This year the QSVS re-valued all 58 rateable local governments in Queensland (as at 1st October 2010), with over 1.6 million valuations undertaken, scheduled to take effect from 30th June 2011 for local government rating, state land tax and state land rental purposes.
The floods and extraordinary weather in December and January delayed the valuation results until late month, giving time for the weather impact to be taken into account in each of the state’s 41 disaster areas. Some 23,000 flood-affected properties were re-valued.
The valuation process also changed aligning us with the rest of Australia. Site value is now used rather than unimproved value assessment for all non-rural land. Site value is the amount which land could be expected to sell for, without any structural improvements, such as houses, buildings or fences. A site valuation includes site improvements to the land, such as clearing, filling, revetments, levelling, drainage works and remediation – whereas unimproved value assessments do not. Excavations associated with a building, however, are not included; nor are intangible elements such as infrastructure credits.
But since their release, complaints began to surface – mostly about the degree to which values have risen and especially in those areas rated only a year or so ago. The protests have been so widespread that we decided to take a closer look.
Site value changes, both up and down, can be attributed to a number of factors including the introduction of the new methodology (as mentioned above); market movements; the time between valuations and the effects of the recent weather events.
Now to cut a long story short, the change in valuation methodology, at least at helicopter level, appears to have gone smoothly and the government did step up and re-value those properties affected by the January floods. But as is often the case, the devil is in the detail. And when you start breaking down the actual site valuation results, some serious cracks appear.
When looking at site values for whole council areas, surprising results emerge. Last year, for example, residential site values rose nearly 7% in Bundaberg but only 0.1% in Hervey Bay, yet they both share similar average residential site values of $129,000 and $135,000 respectively. Likewise, Logan City’s residential values rose twice as fast as those in Ipswich last year. Why?
And how come Gladstone’s residential values grew 5% last year and Mackay’s just 0.3%, whilst they actually fell in Rockhampton by 0.2%? They rose 5.6% in Gympie and 10.3% in Toowoomba over the same time frame. None of this makes sense at all.
What does make sense is that average land values in flood-affected suburbs dropped whilst values of those unaffected suburbs didn’t, but some of the results on a suburb by suburb basis are also somewhat bewildering.
Why, pray tell, did site values, on average, rise by 13.2% across Brisbane’s northern suburbs, but by only 1.2% on average across the city’s southern suburbs? Site values rose 11.4% across Brisbane’s west but only 4.3% across its eastern flank. What, I wonder, has happened north of the River to deliver such a lopsided result? What has stuffed up across the south?
But there’s more. Why have site values risen 9% across the Sandgate foreshore but shown no growth in Manly – the new Redcliffe Bridge perhaps? But then if new infrastructure influences results, why have site values dropped on average by 3.5% across those suburbs within close proximity to the new Richlands railway station?
Why have Chermside’s site values gone up by 19% but Carindale’s by just 4%, while Mount Gravatt’s have shown no growth at all? Has the value of land in St. Lucia really increased three times faster than the same dirt in neighbouring Indooroopilly?
Things get even stranger when looking at individual streets. I picked three in Kenmore as a case study. No property in these three streets flooded; they all are within a short walk of each other (within a 500 metre radius) and are all accessed off the same minor collector road.
Site values in one street fell consistently for all 16 properties, by 20%. The next, also 16 homes, saw an average fall of -11%, yet four properties saw their site values rise. And the third street, with 35 homes, saw site values on average rise 6%. In this longer street, some site values dropped 20%, whilst others rose by 35%! Remember, not one of these houses was flooded, and in my opinion, some that dropped in value are the best positioned in the street.
Also, why does someone with an 800 sq m allotment have a site valuation of $320,000, whilst a 1,500 sq m allotment in the same street is valued at $215,000? A similar thing can be found in townhouse developments. In the projects we analysed across Brisbane’s inner west, some townhouses have site values 40% higher (on a per sq m basis) than other townhouses in the same complex.
What is heck going on?
Look we applaud the change in methodology; the effort to re-value flooded property and transparency (a rare thing in government these days) by allowing everyone(free until 1st August 2011 at least) access to all site valuations across the state. But we are scratching our heads as to the inconsistencies uncovered and we are not alone. Along with many others, we feel that an explanation is warranted.
“This report is republished with permission of Matusik Property Insights.”
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