Home property values are of great interest to potential home buyers as well as home sellers especially at present when the Australian property market is at its strongest. According to the Australian Bureau of Statistics (ABS) home prices in the eight capital cities of Australia increased by 3.4% in the December quarter 2013 and 9.3% through the year to the December quarter 2013. The highest annual increase in home price index was in Sydney at 13.8%, followed by Perth (8.7%), Melbourne (7.9%), Brisbane (5.7%), Darwin (5%), Hobart (4.9%) and Adelaide (3.4%). In Canberra, there was a 0.3% decrease in home prices.
Home appraisal and valuation is an important element in comprehending the dynamics of the Australian property market. The individual value of a property or house is dependent on several factors. Savvy property owners make sure that every visible features of their property are improved to ensure the highest return when renting or selling it. On the other hand, home buyers should understand the true value of their new investment.
Property valuation and appraisal are the initial steps in the investment process, and home sellers and buyers should realize that these are two different steps and could result to two different figures. Home buyers and sellers should know when a formal valuation is needed, and when an appraisal will suffice. Let’s look at the differences:
Property valuation is required when a property owner offers his property as a security for a home loan – to buy a new property, to use the owner’s equity on the property for re-financing or as a security for a new home loan. It is also required for property settlement.
Property valuation is a complicated undertaking that takes time to accomplish. A formal valuation should be carried out only by a qualified valuation professional who has the training and educational preparation in the field of property valuation. This is to ensure that the valuer considers all the following factors relevant to the value of the property:
- The condition and structure of the property
- Structural/building flaws
- Notable features of the property
- Zoning codes of the local council
- Encumbrances and limitations on the property
- Supplementary attributes of the property ( specifically for properties in the rural areas)
Property appraisal is usually done by a real estate professional to serve as a guide when selling or buying a property. The appraise value of the property has no legal standing since it is only an estimate based on the real estate person’s knowledge and experience of the current property prices in a certain locality. Property owners can request for an appraisal from real estate professionals who are familiar with the market condition in the locality where the properties are located to give them an idea of the buying and selling prices in the local market. In fact, it is to the advantage of a home buyer or seller to get more than one appraisal as a basis of comparison.