A shocking, costly truth is hidden in land value averages
Did your property value just skyrocket? There’s good news for some, and nothing but bigger bills for others. And if you back on to a creek — look out. We reveal the costly truth behind the land value averages.
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Did your property value just skyrocket? There’s good news for owner-occupiers, but, look out commercial property owners and investors, it’s going to cost you.
New land valuations conducted across the state and released this month have left some Brisbane residents shocked. Although Queensland’s Valuer-General Neil Bray said the Brisbane City Council area “had increased by as much as 6.8 per cent since its last valuation in 2017”, the range of increases is wide and varied.
For example, some property owners in pockets of Gordon Park, Newmarket and Stafford backing on to Kedron Brook and Breakfast Creek had valuation hikes of more than 51 per cent.
Previously:
North Brisbane land values hit new highs
Brisbane’s most expensive suburb revealed
Land values soar across Brisbane
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Meanwhile, similar sized creekside-properties in suburbs such as Herston — less than 3km from the city’s GPO — had zero growth and are actually valued less than those further upstream.
While an increase in value of an asset may seem — logically — like a good thing, some residents told Cith North News they are worried about looming blowouts in rates bills and land tax (case studies, below).
The good news is that a Brisbane City Council spokesman said annual rate increases are capped at 7.5 per cent a year for owner occupiers.
“Brisbane City Council categorises all its rateable properties into a rating category based on the property’s primary use,” he said.
“Each rating category has a specified rate set annually in council’s Budget, which is handed down in June.
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“General rates are calculated using a property’s rating category and its Average Rateable Value, as determined by the State Government’s Department of Natural Resources, Mines and Energy.
“Council averages values over the last three years to minimise impacts on ratepayers from property valuations, with any increases to residential rates capped at 7.5 per cent per year for owner-occupiers.”
The bad news is that cap doesn’t apply to people who hold the property as an investment or if the land is used for commercial purposes. And State Government land valuations are used to work out how much State Government land tax an owner will be slugged. Individuals start climbing the land tax ladder when their land’s value is more than $600,000, starting from $500 plus 1c for every $1 up to $999,999, rising to $4500 for $1 million in value, plus 1.65 cents when the value tips past $1 million, and so on. There’s no pensioners’ discount.
A Department of Natural Resources, Mines and Energy spokesman said if residents did not agree with their new land valuation, they could lodge an objection.
“Land value and property market trends are determined by analysing recent sales of comparable properties,” he said.
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“Differences in land valuations between neighbouring properties is not uncommon, as sales and property market trends are influenced by a number of different factors including views, shape, size, noise and elevation.
“While there are many influencing factors at play in determining land value, recent sales in the Gordon Park area — and across Brisbane — have shown that land overlooking parkland and creeks is in higher demand and purchasers are willing to pay more for these attributes.
“The impact of flooding is also considered when assessing land value.
“The department encourages any landowners who disagree with their valuation to lodge an objection online (via www.qld.gov.au/landvaluation) before Tuesday 7 May 2019.”
WATER VIEW LIFTS VALUE, EVEN IF IT’S A CREEK
Gordon Park’s median value, as reported by the Department of Natural Resources, Mines and Energy, was just 10 per cent, with the median value of land now $550,000 for the 1078 properties in the suburb.
Newmarket’s median value rise was just seven per cent, bringing the average land value to $610,000 for the 1235 properties in the suburb. Stafford’s median was lower, at 5.4 per cent, with a median value of $485,000 for 2100 properties.
However, searches on the “find your annual land valuation” website shows properties on the Kedron Brook side of Bedford and Stirling streets, among others, had seen values go up 50 per cent and above. In one case, the value of a 405 sqm property with a humble home next to a park and backing on to the creek rose $230,000 to $680,000. Properties backing on to Archer Park rose from $205,000 to $660,000.
Values on Davidson St, Newmarket, backing on to Breakfast Creek, went up by about 50 per cent. A piece of land on that street went up from $480,000 to $720,000. In comparison, properties across the creek on Tennis Ave, Ashgrove, only went up by about 10 per cent.
Beth Gowan’s Stirling St, Gordon Park, land went up in value by 50 per cent. Her 759 sqm block backing onto Kedron Brook — which she bought for $17,000 after half a metre of water flowed through it during the 1974 floods — now carries an unimproved valued of $840,000.
“I had a bank valuation recently and it was around $850,000 to $900,000, so that means that the house, the pool, the landscaping, fences, everything, is only worth about $100,000,” she said.
“Previously the land value was $560,000 so a 10 per cent increase seemed reasonable to me.
“But 50 per cent is ridiculous.”
She said she understood that the DNREM had taken the sale of two houses that sold at the end of the street into consideration when deciding her new value. They sold for more than $750,000 each, she believed, but had houses on them that were later demolished to build new ones.
“So they are using that argument to decide what our value is,” she said. “There are other houses that have sold around here where people wanted to keep the house, and they haven’t sold for that much. I think there’s a couple of sales that are skewing their valuations.”
She said she was particularly worried because even though it was a family home, she didn’t live there any more. She was about to pass it on to another family member. So, according to the State Government, she was actually a landlord and had to pay land tax. She would be lodging an objection, she said.
“Really it is just a revenue raising exercise on behalf of the State Government,” she said.
“The council says values are determined by the State Government, but it’s raising revenue for them, too. We are being charged more without getting any additional benefit.
“It’s one thing to be sent a letter saying your value has gone up from $560,000 to $840,000, but they don’t give you any justification for that. And they say you can object, but they don’t tell you how the decision was made so you have no idea how to form the basis of your objection.”
The value of Stafford businessman Michael Guy’s block of 1039 sqm went up about 85 per cent. It backs on to Kedron Brook,
“From $350,000 to $640,000 in one go,” Mr Guy said. “That means I now qualify for land tax, too. How can they justify a $300,000-plus uplift in just one year?”
Mr Guy runs woodworking supply company Hawleys Engineering Solutions from a three-storey building on the block, and employs four people. He has a recent bank valuation that puts the entire property’s value at $1.4 million.
“So what that says is that the three story building here is only worth $760,000,” he said. “I could not imagine that it would cost under $1 million to rebuild our warehouse — it’s three storeys.”
Nearby properties also experienced sharp rises, including one 407 sqm block that went up 100 per cent to $360,000.
Mr Guy said he had inherited the business from his father, and had worked there all his life.
“I think they have just run shot in the Budget and they need more money. How else can you justify this increase?” Mr Guy said.
“It’s going to cost me thousands more every year. I was trying to prepare for my retirement. They are just making it hard and harder for self-funded retirees. I had planned to hold on to the property for a few years after retirement — it’s better return than in the bank. Are they trying to force us all onto the pension?”
WATER VIEWS BUT CLOSE TO CITY? NO INCREASE
A few minutes drive towards the city, and it’s a different story.
John Dobinson lives in Butterfield St at Herston, less than 3km from the city centre and close to the RBWH. His land value is just $460,000 for 630 sqm, with a zero per cent rise on last year.
Mr Dobinson is not happy. He has been agitating for the Brisbane City Council to buy back his property for years, or at least fix up the drainage behind his home, which backs on to Breakfast Creek.
“I think the Valuer General and indeed the Minister owe an explanation as to what is the methodology being used by the office, how many people are doing the valuations and whether they are following the same methodology,” he said.
“I would be interested to know what the land values are on properties beside the Brisbane River in New Farm and Teneriffe and Newstead compared to two years ago as well.
“I think the Valuer General has blundered on Herston, a suburb less than three kilometres from the CBD with similar water issues to recognised trophy suburbs where land has jumped.
“When Queenslander houses in Herston have sold for over a million dollars in the past couple of years, one with virtually no back yard (as there are townhouses on it), and when you get a nondescript house without a garage at Butterfield St, backing onto the Enoggera Creek (Breakfast Creek) last year bringing $790,000, then the Valuer General needs a wakeup call.
“Again, I wonder what the council, or State Government and (Queensland’s) Metro North (Health) agenda is when the value of land backing onto Enoggera Creek is kept flat, not moved a dollar, on lower Butterfield St, unmoved at $460,000 over two years just 400 metres from the hospital; and wonder if both council and or the State Government are planning a buy back, either to increase Rasey Park, or to provide for the future Herston Quarter’s needs, such as for parking.”
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