In Australia most
rates and land tax are based on the land value (unearned increment) as
this is considered to be the most equitable method of assessing
both liability for charges and taxes related to land and ability to
pay. Owners of more valuable properties will, accordingly, pay more
than those whose properties are less valuable. The definition of
value is a statutory one and the relevant statute requires the valuer
to take into account certain assumptions (eg that the land is vacant
or freehold) when valuing properties.
best evidence of land values are sales of comparable vacant land
within a locality that take place around the valuation date. However,
in the absence of vacant land sales, values are based upon an
analysis of sales of improved properties (that is, including
buildings) in the vicinity which occurred around the date of
valuation. Such sales provide the most reliable guide to value and
reflect the market conditions at that time.
the case of properties involving improvements the valuer deducts the
added value of all the improvements from the selling price to
ascertain the value of the land. The added value of the improvements
represents the depreciated replacement cost and is determined by
deducting from the replacement cost an allowance for accrued
depreciation and obsolescence.
values reflect the market's perception of the attractiveness of an
area. If buyers are willing to pay higher prices for property in a
particular area then land values in that area will reflect this. Other
factors which, if prominent, may affect the valuation include
transformers, concrete bus shelters, easements, main streets, traffic
lights/ noise, lanes and pathways.