Property value | How to determine my property value

How can I determine the value of my property?

Property valuations are obtained for various reasons, such as:

    • buying or selling a property, 
    • insuring a property, 
    • calculating municipal rates, or 
    • obtaining a bank loan 

In this article, we explain the concept of a property valuation, the various categories of property appraisals available, including market price valuations, replacement cost valuations, sectional title insurance valuations and content valuations. We also provide insights into various methods of property valuations and offer guidance on obtaining a trustworthy and accurate property appraisal.

What is a Property Valuation?

A property valuation refers to the process of determining the monetary worth of a real estate asset. It involves assessing factors such as location, condition, and market trends to arrive at an estimated value. There are various types of property valuations utilised for different purposes, reflecting the diverse needs and perspectives of stakeholders in the real estate industry.

What is a market price valuation?

A market price valuation establishes the anticipated sum at which a property is expected to be sold for, on the valuation date, between a willing seller and a willing buyer in an open market scenario. Both parties are presumed to be informed, acting sensibly, and without any external pressure. 

This valuation considers various factors including the property’s land value, its state of upkeep, attractiveness, accessibility, and its proximity to amenities like shopping centres, schools, medical facilities, main transportation hubs, and other significant points of interest.

Read: Why it is wrong to insure the market value of your house.

What methods can be used to determine the market value of a property?

1. Cost Approach: This method determines the value of a property based on the expense of constructing it today, factoring in depreciation caused by various elements.

2. Income Capitalisation Approach: This approach assesses the value of the income stream that a property currently generates or could potentially generate. It is primarily applicable to commercial or income-generating properties.

3. Comparable Sales Approach: This approach involves analysing recent sales of properties that are physically and legally similar to the subject property, within the general vicinity. It is commonly applied to single-family homes and land.

The valuer determines the most appropriate method, or a combination thereof, to ascertain the fair market value based on the property’s location and intended use.

What is a replacement cost valuation?

Accurately determining the required insurance cover for a building necessitates a thorough professional replacement cost assessment. This assessment takes into consideration all expenses related to rebuilding in the event of complete loss or damage, including demolition, debris removal, professional fees, construction expenses, and any supplementary building services. Additionally, it takes into consideration the potential escalation of costs from the policy’s commencement or renewal date.

It is important to insure a building to its replacement value; if found to be underinsured, the insurer can exercise their right to reduce the claim pay-out in proportion to the amount of underinsurance. 

What is a sectional title insurance valuation?

The body corporate is legally required to insure the built structures and common property to their replacement value. The standard insurance valuation process involves measuring and quantifying all common property and registered sections, while considering the quality of workmanship and finishes, observed in a representative sample unit. 

The registered section sizes are provided in the participation schedule of the sectional plan approved by the Surveyor-General. The valuer also refers to the approved sectional plan to determine which structures and areas fall under the body corporate’s jurisdiction. By definition, the body corporate is responsible for areas beyond the median line that runs through the outer walls, ceilings, and floors of the registered sections, such as exterior wall surfaces, doors, windows, roofs, and geysers.

However, the body corporate is NOT responsible for insuring owner-installed upgrades to units, like swimming pools, lapas, carports, and high-end interior finishes. The individual owners are responsible for informing the trustees about the additional replacement cost of their unit upgrades, should they want them included in the body corporate policy, at their own expense. 

It is important to note that the valuation does not account for any alterations that are not reflected on the latest approved sectional plan. It can be assumed that these alterations are not approved by the council and may be considered illegal and potentially uninsurable.

What is a contents valuation?

A contents valuation refers to the process of determining the monetary value of assets that are not permanently affixed to a building’s structure, such as walls, floors, or ceilings. These movable assets, also referred to as contents, include items like furniture, electronics, personal belongings, and other movable possessions within a building.

In contrast, assets that are permanently attached or built into the structure, like carpets and ovens are considered fixed assets. These are typically covered by the insurance policy for the building itself.

To guarantee comprehensive protection, it is essential to maintain distinct insurance policies for both the building and its contents. It is crucial that both are insured for their complete replacement value.

What is the best way to get a valuation for my property?

There are several avenues available to assess the value of your property, depending on your specific needs and preferences and your budget. Here are the options:

1. Property Valuation Company

Seek the services of a reputable property valuation company. These firms typically have a national footprint and specialise in a wide variety of property types and valuation applications. They hold a wealth of knowledge and offer a standardised reporting format that is based on physical site inspections.
A specialist valuation company may be slightly pricier than other options, but offers peace of mind and better recourse, should the client suffer any adverse consequences due to a faulty assessment.


      • physical site inspection
      • experience and internal resources 
      • higher accuracy due to internal quality assurance
      • national footprint
      • higher professional indemnity cover means better recourse for the client


      • sometimes costlier than other options

2. Professional Valuer

Appoint a certified property valuer to perform an appraisal based on a visual site inspection. Stand-alone valuers tend to operate in a limited coverage area and may not be suited to all property types and valuation applications. Also, while adequately qualified, their professional indemnity cover may not be sufficient for large commercial buildings and residential complexes, meaning that the client will have limited recourse. This is especially of concern when a replacement cost valuation is needed for insurance purposes as it puts the client at risk and is often compensated by an overestimation of values, resulting in higher insurance premiums for the client.


      • physical site inspection
      • qualified valuation
      • suitable for market price valuations of small commercial and residential properties


      • insufficient professional indemnity cover means higher risk for the client
      • lack of expertise and routine in some applications 
      • propensity for compromised objectivity in some instances
      • limited suitability for large commercial properties and residential complexes
      • limited suitability for replacement cost valuations

 3. Online Valuation Tools

Some websites and apps provide automated property valuations that are based on sales data obtained from the market and use algorithms and data analytics to produce estimated property values. 
While automated valuations are more affordable than the service provided by a professional valuer, they are based on market averages and don’t take into consideration specific attributes such as building design, layout and state of repair. 


      • budget-friendly
      • quick


      • limited availability in some areas
      • no site inspection
      • no recourse
      • not suitable for replacement cost valuations

4. Real Estate Agents

Property owners rely on real estate agents to provide an estimated sale price for their property. This service is typically provided free of charge and is based on recent sales data of similar properties in your area.
In general, estate agents are not qualified valuers, and their estimates tend to be guided by the intention to secure the property owner’s mandate to market their property. Therefore, the objectivity of such an estimate is often questionable.


      • free


      • lack of qualification
      • lack of objectivity
      • no recourse
      • not suitable for replacement cost valuations

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