You can always rely on the property industry to deliver interesting twists, and this week’s revelation that the application applied for assessing land values was badly broken, was just too funny for words. Like most things that relate to the government in the “State of Decay” nothing works, be it education, transport, hospitals, roads, the sorry list goes on. When the government puts the valuation process to tender, the big valuation companies walk away and the little guys jump in. The reasoning being – why value a home for $1.50 when they can get paid $2,000.00 to do a professional job. The general consensus is that the current mass-appraisal system simply can never work in Mosman, however it works fine in Campbelltown. It is easy for a computer to distinguish per square metre with a land subdivision out west where you don’t have to factor in a view or any other value distinctions. Also, if you look at most of the suburbs that are listed as being under valued, you will see that the vast majority listed all contain the blue factor, namely a water view. When building out west, the general rule of thumb is $1,500.00 per square metre, whereas in Mosman, it can range from $3,500.00 to $10,000.00 per square metre. Let’s face it, individual data is entered into a computer and that then determines what the square metre rate for a particular area is. One could suggest that in this day and age the current system is as accurate as licking your finger to determine the direction of the wind.

As quick as a flash, the Valuer-General came out and said that will carry out a re-evaluation of every property across the state. Well nothing will change if you still persist in charging out the rate of $1.50 per property, because they are 1,000 per cent off what should be the charge rate. This then identifies that they simply can’t afford to pay the market rate which causes a greater dilemma. It is not a matter of ‘hey presto’, and here is the revised process. What they really need to do is look at where the system is broken and move on from there,(which will never happen). All that will simply happen is that they will wait for the current exposure to die down and in another ten year’s time the NSW Ombudsman will come out with yet another finding. As one of Sydney’s leading top end valuers told me, “When we received the tender document we filed it in the bin. When the day comes to accepting this contract we will close the business and buy a lawn mowing business. Why get paid $1.50 to value a home? Then, if there is an objection you have to respond and you don’t get paid for addressing the issues contained in the objection, it then has to come out of my pocket.” This is just another example of a broken system.

For example, Mosman, where it was claimed that the valuations were out by more than 40 per cent on 21.3 per cent of sales. North Sydney was also said to be out by 40 per cent on 23.5 per cent and we all know that both these municipalities have Sydney and Middle Harbour views. How do you then differentiate between a home with a view as against one that does not have a view, given they use a mass-appraisal system. Then, if they decide to increase Land Tax, the investors walk with housing affordability for rental properties skyrocketing. Not to mention the significant reduction in property transactions which then will severely impact on the Stamp Duty coffers. All that will happen is that the wealthy will buy all the investment properties and milk the rental market for all that it is worth – another no brainer. One must ask the question, why, when the Ombudsman came out and criticised the system, the Valuer-General immediately came out and agreed and then went on to say “we will fix it in five years”. What they are really saying it will be forgotten in five years – nothing changes.

With the “shock” market raising a few eyebrows in the last 48 hours, more than a few eyebrows are being raised at Australia’s strongest currency, the ‘Mosman $’. The market has now made way for urgency with more quick exit sales than we have seen in years. Vendors are now receiving refunds on advertising dollars not spent which is a first in quite some considerable time. Domain North next week is an all time record edition with 152 pages so back to sections one and two. This is a great result for the property market and it will be riveting to see if the property market can maintain its composure or capitulate (I predict the market will hold firm).

The property market is stronger than the Land Tax argument. The only problem is that all associated with our industry were aware that the system was flawed, and congratulations to our State Government who thanked the Ombudsman for bringing this to its attention. Where would we be without them (not going there). Cheers ^__^

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