In March 2020, a worldwide pandemic was declared, called COVID-19. Australia was locked down to limit the spread of the virus, impacting individuals’ lifestyles, the working environment and disrupting businesses. Some businesses were forced to close their doors and stand down or lay off staff.
In response, the NSW Valuer General reviewed the impact of COVID-19 on the NSW property market in preparation for the 1 July 2020 valuations. The review found sales activity had continued with vendors and purchasers still active in the property market, despite COVID-19. The review also noted that while all sectors experienced reduced levels of sales activity, the residential property sector was the most active and proved resilient.
Following extensive research and consultation with property owners and representative bodies, the Valuer General produced the report, Review of the impact of COVID-19 on the NSW property market, which detailed the impact of COVID-19 on land values based on land use. A copy of the report can be found at www.valuergeneral.nsw.gov.au/publications/reports.
The review concluded that residential landholdings would be valued at 1 July 2020 by principal reference to comparable sales. It also outlined the Valuer General’s approach to reducing non-residential land values by up to 25 percent in the absence of relevant comparable sales for the purpose of the 1 July 2020 valuations.
Following on from the Review of the impact of COVID-19 on the NSW property market, the Valuer General has undertaken further analysis of state-wide sales data, to determine the availability of sufficient property sale transactions to support the 1 July 2021 valuation for rating and taxing purposes.
The analysis included a review of sales evidence data at the State level (NSW), Local Government level and individual specific uses, in order to compare the total volume of sales over 2018, 2019 and 2020, with additional consideration given to sales transactions that have occurred in 2021.
In summary, the analysis found that there was a significant increase in sales activity between 2019 and 2020 across the rural and residential market sectors, with only a slight decrease across the business and industrial sectors. Overall, there was a rise in transactions from 2019 to 2020.
The findings of the review and additional analysis support the conclusion that the property market, across all sectors, has remained sufficiently active for the 2021 valuation to be undertaken. For the residential property sector, valuations for the purposes of rating and taxing at 1 July 2021 will be determined by principal reference to comparable sales evidence. For the non-residential property sector, valuations will be determined by principal reference to comparable sales evidence where such evidence is sufficient, noting limited transactions in the Sydney CBD generally and such sub-sectors as regional shopping centres, serviced apartments and CBD and metro hotels. In the absence of sufficient comparable sales evidence, the 2020 valuation will be maintained.
Dr David Parker