Good rural seasonal conditions contribute
Land values in the Narrandera local government area experienced a very strong increase between July 2021 and July 2022 according to the latest valuations released by the NSW Valuer General.
This upward trend was consistent across all market segments and the main driver was the comparative affordability in the residential sector and ongoing good seasonal conditions in the rural sector.
Residential land values experienced a very strong increase, which was mostly attributed to low interest rates and comparative affordability supported by owner occupiers and investors creating strong demand for residential property across the district.
Large lot residential around Camellia Estate area, large sites and hobby blocks around Narrandera, and Narrandera village unsewered areas experienced a strong increase due to less affordability than the more central residential areas of Narrandera where values had experienced a more subdued increase in previous years.
Village land values showed a slight increase due to more subdued demand as a result of reduced business confidence in light of the past few years dealing with the pandemic.
Industrial land values experienced a very strong increase in values, attributable to confidence stemming from the agricultural sector, and very strong demand for property confronting a shortage of industrial land on the market.
Rural land values had a very strong increase underpinned by high commodity prices for livestock and grains, favourable seasonal conditions and a limited supply of rural properties brought to market.
Strong increases were recorded in land values for primary production southeast of Narrandera and timbered agricultural land indicating restrained demand for more secondary agricultural land.
The report stressed that the land value was the value of the land only and it di not include the value of a home or other structures.
The term ‘added value of improvements’ is the dollar value that a home or other structures add to land value.
Land values on the rise
The added value of improvements is their worth as demonstrated by the property market in a local government area and is generally not equal to the replacement or insurance value. Improvements add to the value of the land as demonstrated by the analysis of property sales.
Land value is the value of the land only. It does not include the value of a home or other structures.
The term ‘added value of improvements’ is the dollar value that a home or other structures add to land value.
These are determined by the analysis of a broad range of market sales including vacant land and properties with improvements in a range of conditions, ages, sizes and styles.
Sale prices of the range of properties is then compared. Where the land is comparable the difference in sale price is the added value of the improvements.
This analysis is then included in a table identifying different building types on a dollar rate per square metre basis.
Those rates are then used to deduct the added value of the improvements from other sales in the area to determine their land values.
More information on this “paired sales analysis” approach is contained in the Valuer General’s policy on the ‘Valuation of Single Residential Land’ available on the website at valuergeneral.nsw.gov.au.
This article appeared in the Narrandera Argus, 26 January 2023.
