Getting an accurate property valuation is crucial for homeowners and investors when buying, selling or financing real estate. But how precise can you expect valuations to be in 2023 amid changing market conditions?
Factors Impacting Valuation Accuracy
Several key factors affect the accuracy and reliability of a property valuation:
- Type of report – A full comprehensive report tends to be more accurate than a kerbside external inspection. Valuers have more data to make informed judgements.
- Valuer expertise – An experienced certified valuer intimately familiar with the local area will provide greater precision. Their judgement calls on property features are more dependable.
- Market conditions – When the market is hot with lots of sales data, valuations can be quite accurate. In slower markets with fewer comparables, precision decreases.
- Unique properties – Valuing one-of-a-kind homes or rural acreages involves more guesswork. Standard homes are easier to value based on similar sales.
- Renovations and condition – If the condition doesn’t match what’s visible, valuers may underestimate or overestimate value. Structural issues also increase uncertainty.
Current Market Conditions
The 2023 property market varies significantly across Australia. Sydney and Melbourne saw values drop around 5% last year amid rising interest rates. But other cities like Brisbane and Adelaide remained more resilient.
Regional markets tell a different story again. Some lifestyle destinations saw an influx of demand during the pandemic. Others dependent on tourism or mining were more subdued.
These divergent conditions make blanket generalisations about valuation accuracy difficult. However, with rising interest rates putting downward pressure on prices, valuations in heated pandemic markets are more likely to be overstated compared to slower areas.
It’s common for different valuers to reach somewhat different conclusions on the same property.
Valuations rely on a valuer’s judgement and interpretation of the current market. Two competent valuers could still arrive at assessments 5-10% apart due to differing perspectives on the best comparable sales and property features.
For a $500,000 suburban home, such variances mean two valuations in the $450,000-$550,000 range.
Tighter ranges occur with full reports on typical homes in steady markets with abundant sales data. Wider potential variances apply to unique properties where direct comparisons are limited.
Achieving Maximum Accuracy
For the most precise property valuation possible:
- Request a comprehensive inspection including interior access – this provides more data.
- Choose an independent valuer – not one recommended by your real estate agent.
- Select a highly experienced valuer familiar with the local area.
- Provide information on recent renovations, upgrades and any issues.
- Give context on your situation e.g. urgency to sell. This assists valuers in allowing for negotiating ranges.
- Ask questions if the valuation seems unreasonable based on comparables you know.
While property valuations are never an exact science, taking these steps will help maximise accuracy. But allowing for a reasonable margin either side is prudent in current uncertain market conditions.