How land is valued in NSW
Understanding how land is valued can be helpful for property owners and anyone interested in the real estate market.
Overview
The Valuer General oversees the valuation system, ensuring over 2.6 million parcels of land are valued each year. While it’s not possible for us to inspect all land in NSW every year, we are able to ensure fair and equitable land values by using a ‘mass valuation’ approach.
Mass valuation approach
We employ a mass valuation approach to assess land values.
This ensures consistency and efficiency across a large number of properties. This is how it works:
How does the mass valuation system work?
Read transcriptValuers categorise properties into groups based on similar attributes. These groups are known as components.
Properties within a component are expected to experience similar changes in value.
Within each component, valuers select two types of benchmark properties:
- primary benchmark: Represents most properties in the component
- reference benchmarks: Represent higher and lower valued properties and other subgroups.
These benchmark properties serve as reference points for valuation.
Valuers analyse property sales data, including both vacant land and improved properties.
Adjustments are made to sales prices to:
- remove the added value of improvements (such as buildings)
- reflect the property market conditions as of July 1st in the valuing year.
The benchmark component report provides details on sales used for valuing benchmark properties.
Valuers individually value all benchmark properties, using sales evidence. The rate of change recorded for the primary benchmark is called the component factor.
Factors considered include:
- most valuable use of the land
- zoning, heritage restrictions, and other use constraints
- size, shape, features, location, and views
- nearby development and infrastructure.
Valuers review the reference benchmarks to ensure quality.
The component factor is then applied to all properties within the component.
This determines each property’s new land value.
Rigorous quality checks ensure accuracy and consistency of new values.
We closely monitor the quality of our land values.
We do formal quality assurance reviews in each local government area before the Valuer General accepts land values and they are entered on the Register of Land Values.
We monitor contract valuers’ performance and the quality of land values through:
- an annual risk-based quality assurance program
- system-based data integrity checks.
Valuation assumptions and considerations
Concessions and allowances apply to some land.
Under the Valuation of Land Act 1916 (the Act), the land value you are liable to pay rates or tax on may be reduced due to:
- allowances, such as for profitable expenditure and subdivision
- concessions for relevant statutory restrictions, mixed development apportionment factors and mixed-use apportionment factors.
These apply to your land only. They do not relate to any concessions or allowances based on your personal circumstances, such as a pensioner concession.
If a concession or allowance applies to your land, this should be noted on your notice of valuation or notice of assessment.
You can lodge an objection if you believe that you are entitled to a concession or allowance, or that the amount applied to your land is wrong. You must tell us:
- the type of concession or allowance you are objecting to
- the current concession or allowance amount on your notice or assessment
- the amount you think it should be.
For a profitable expenditure allowance, you must also give details of the nature, date and cost of any works.
Also see our policies:
Heritage restricted land
We value land affected by heritage restrictions under two different acts:
- Section 14G of the Valuation of Land Act 1916 governs the land value of properties that are heritage restricted by a planning instrument like a local or regional environmental plan. The land value takes this heritage restriction into account.
- Sections 124–125 of the Heritage Act 1977 govern how we value properties listed on the State Heritage Register, which is part of the State Heritage Inventory that the Office of Environment and Heritage manages. The value is called a heritage value, and takes into account the heritage listing’s impact. If your property is on the State Heritage Register, you are entitled to a heritage concession.
If your property is heritage restricted, this should be noted on your notice of valuation or notice of assessment. If it is not but you believe it should be, you can apply for a determination of the land value for heritage restricted land. You can contact us for information on how to apply.
Also see the Valuer General’s Valuation of heritage restricted land guidance note.
The mass valuation method takes into account the type of land being valued. We set out some factors that apply to specific types of land below.
Rural land
For rural land, valuers consider all factors that influence value such as:
- access and location
- highest permitted use
- soil type
- topography
- value as a lifestyle block
- classification, productivity and size.
Valuers classify rural land based on general use, including cropping, grazing and horticulture. A property can have multiple land classes, and valuers will generally determine a rate for each.
Also see the Valuer General’s Valuation of rural land guidance note.
Land with water rights
Since 2005, valuers consider the right to use the land for irrigation, but do not include the value of any water included in those rights.
For more information, see our Valuation of rural land guidance note.
Strata sites
For strata sites, the Valuer General determines the land value for the whole site of the strata scheme. The value is based on the most valuable use of the whole site, which may exceed its current development.
Each unit’s land value is a portion of the strata scheme’s land value, based on the unit entitlement in the strata plan. Councils and Revenue NSW use the land value of each unit to determine rates and taxes.
The Valuer General does not value individual units or allocate unit entitlements. If you have questions or concerns about unit entitlement, please call NSW Fair Trading on 13 32 20 or visit www.fairtrading.nsw.gov.au. Also see: