Land values baffle QLD home owners

Brisbane northside residents are fuming over Queensland Government land valuation hikes of up to 35 per cent in the face of a plunge in actual property prices.

Recently issued state government valuations for the Grange showed an average jump of 29.6 per cent in the 12 months to October, 2010, while median property values fell 5.8 per cent in Real Estate Institute of Queensland estimates.

In the neighbouring suburb of Gaythorne, average land values jumped by 26.5 per cent, compared with a 4.3 per cent drop in the median house price.

In contrast, the maximum average increase in land value in the southside suburb of Rochedale was 10.3 per cent.

Under changes to the land valuation process introduced last year, suburban properties were judged on “site value”, rather than “unimproved” value”, which takes in market value of the land in its present state.

Although site value, which is used by state government and the council to calculate land tax and rates respectively, does not include the value of the house or unit on a property, Queensland Valuer-General Neil Bray said it did “reflect” market value.

However, Go Gecko real estate agent Brendan Terry said he could not reconcile the great discrepancy in the figures.

“It’s been an awkward time, for me, and I would assume all other agents, trying to communicate to our vendors their property in the eyes of the state government is going up [in value],” he said

“But in the eyes of the buyer it’s actually going down.

“It’s actually causing conflict between vendors and agents. I’ve seen a lot of vendors jumping from agent to agent and I put it down to this inconsistency.

“I’m not sure why the state government has gone down this path.”

Grange resident Ben Charlton, whose house is on the market, said he too could not understand the stark difference.

The land value of his property increased $140,000, from $290,000 to $430,000, in the year to October 2010.

“It doesn’t make a lot of sense,” he said.

“I would have expected land values to stay the same, certainly not go up.

“If the market price is staying the same then I can’t see how the land value over the course of 12 months would have increased by so much.

“The unimproved land value should be driven by the market value if anything else.”

Valuer-General Neil Bray said land values were based on real market transactions.

“It does relate to the market so the evidence supports the current value,” he said.

“In those metropolitan suburbs, like Lutwyche, we will look for sales evidence in the locality, although vacant land is a very rare sale in those suburbs.

“We’ll look at slightly improved properties, or redeveloped properties, where someone has demolished an old house and built a modern one.

“In those circumstances we actually can determine what the value of the land is because they’ve removed the improvements.”

He cited three sample sales in the Grange in which land sold for between $450,000 and $575,000.

The average land value across 1340 properties in the suburb increased 29.6 per cent to $486,787.

“On the basis of my conversations with the Brisbane valuers, the values that have been applied are supported by evidence,” Mr Bray said.

“It’s possible that there may have been some conservatism in the last value figure, because the current value is supported by evidence.”

Mr Bray discouraged land owners from comparing current value to past figures, due to the change in methodology.

“Looking at the current figure and the current evidence is the best way to understand your land value, rather than looking back one, two or three years,” he said.

“[We don’t] limit land owners from objecting if they consider the value too high, but they have to provide the grounds for that.”

However, property analyst Michael Matusik said the change in methodology wasn’t expected to lead to “whopping increases” in land value.

“It’s difficult to make heads or tails of the new methodology,” he said.

“It determines the underlying value of the property, but there is no way values went up 30 per cent in the last year, unless land was grossly undervalued previously.”

The increase in values is not expected to greatly impact on annual council rate which are based on the average land value from the past three years, Brisbane City Council said.

Mr Terry said it would also have little impact on market sales.

“We’ve had every vendor in these areas call us, excited about their land value going up with the assumption that’s going to draw more people to the area,” he said.

“But in actual fact, property [prices] are going down and buyers know that.

“If anything, the government is certainly 12 months ahead of itself.”

Lutwyche saw the largest increase in values of 34.5 per cent, but there were insufficient sales in the suburb for REIQ to calculate a reliable median house price.