A property valuation is an assessment of a property’s market value at a specific point in time. It is carried out by a qualified valuer and provides an estimate of the price a property could sell for on the open real estate market.
Property valuations are commonly performed when buying or selling a property, securing a mortgage, settling an estate, or determining capital gains tax liability. The valuation figure sets a benchmark for property negotiations and provides helpful guidance around pricing.
There are several methodologies valuers use to assess residential and commercial properties including the direct comparison, income capitalisation and cost approach. The method chosen depends on the property characteristics, intended use and available data.
The Melbourne Property Market
Melbourne is Australia’s second largest city and has a diverse, multicultural population of over 5 million people. It is recognised as the nation’s cultural capital and is renowned for its premium coffee culture, street art laneways, parks and gardens, and major sports events.
The Melbourne property market has experienced strong growth over the past decade driven by population expansion, record low interest rates, and high demand from local and foreign investors. Median house prices across Melbourne surpassed $1 million in late 2021 after rising by over 90% in just ten years.
However, the market has cooled over the past year in the face of rising interest rates, inflation and economic uncertainty. Property values fell by around 5% in 2022 as buyer demand weakened. The inner-city apartment market has been the most affected by declines in rental yields and overseas migration.
Why Property Valuations Are Important in Melbourne
With Melbourne home prices having risen sharply in recent years, obtaining an independent property valuation is crucial when transacting. Valuations help buyers avoid over-paying and guide sellers around reasonable asking prices in the current market.
For sellers, a valuation indicates your potential sale price and assists in setting a competitive price range for marketing. For buyers, valuations give you negotiation power and insight into the true market value of a property.
When financing, bank valuations ensure you don’t borrow more than a property is worth. Given Melbourne’s market shifts, valuations protect all parties from lending more than the current value.
Factors That Influence Property Valuations
- Land size – Blocks with more land area tend to be more valuable.
- Location – Proximity to amenities like the CBD, beaches, parks and public transport impacts values.
- Property type – Houses, apartments, townhouses all attract different prices per square metre.
- Street appeal – Front façade, kerb appeal and presentation influence valuations.
- Condition – Age, renovations, maintenance and structural soundness affect valuations.
- Facilities – Things like parking, balconies, pools and outdoor areas add value.
- Comparable sales – Recent similar property sales provide crucial valuation evidence.
Selecting a Qualified Melbourne Property Valuer
- API certification – Valuers approved by the Australian Property Institute meet education requirements.
- Registered valuer status – Indicates they meet national standards and criteria.
- CPTED training – Certification in Crime Prevention Through Environmental Design.
- Local experience – Valuing properties similar to yours in the same area.
- Reviews and ratings – Strong testimonials indicate quality service.
The Property Valuation Report
- Overview of current market conditions in the local area.
- Description of the property, its key features and condition.
- Explanation of valuation methodologies used.
- Analysis of comparable sold properties.
- Assumptions, adjustments and reasoning behind the valuation figure.
- Financial summary with final property valuation amount.
- Supporting images, maps and data in appendices.
Obtaining a professional independent property valuation is crucial when transacting real estate in Melbourne. Valuers objectively assess your property’s market worth based on a range of factors. Their valuation reports provide well-researched price guidance you can trust.