You must have heard this term earlier as well but you might not be aware of its real meaning and its importance.
In this blog, we are going to explore everything that you must know about unimproved land values and also how you can use this to your advantage when buying your own property. We will also talk about retail or site value and compare them.
Define Unimproved Land Value
Every year, land valuers review the land values in the selected local government areas in the state. Land value is just one of many factors used to calculate the local government rates as well as state land tax and state land rental.
The land valuations also hold information about the real estate market which gives you a chance to monitor the movement in the value of the land.
Land valuations are conducted by the real estate agents in accordance with the Land Valuation Act 2010. The valuations are completed on all properties that are rate-able.
When land has to be valued, there are a lot of considerations taken into account as outlined below:
- Property market research.
- Land zoning under the relevant planning scheme.
- Physical attributes such as city views, the slope of the land, size and shape of the block.
- Recently sold properties in the area.
Unimproved land value is just the valuation of the land with no improvements such as houses, fencing, clearing, levelling or earthworks.
Places Where You Can Find the Unimproved Land Value
The most up-to-date and current platform to look for a property’s unimproved land value is through the Government website.
While you look for properties, there will be instances where the neighbouring properties have a superior and inferior land value to the site you are looking for. This can be because of multiple factors such as:
This method of valuation is common if the surrounding property is rural and they use a different methodology to calculate the value of the land.
The nearby property can have inferior views, steeper typography or even a triangle-shaped block which restricts access in comparison to a rectangular block.
Constraints of the Use of the Land
The constraints relate directly to zoning. There can be some restrictions on how the land can be used for.
The land in your vicinity can be used for different purposes such as commercial or residential.
There can be instances where the land is less than the neighbouring properties. But you should not be concerned about it because it does not always equate to the retail land value, especially when you decide to sell. The positive part is that you will have lower council rates as the rate is calculated on the basis of the unimproved land value.
Define Retail Land Value
Retail land value is different to the unimproved land value and affects the sales price of a property.
The retail land value is the retail price that the home buyers are willing to pay for a site in the current property market.
Retail land value is driven by demand, scarcity, and the number of active buyers in the present market.
The retail value is the amount that people have to pay to secure the location as early as possible.
Difference Between Retail Value and Unimproved Land Value
There are just a few key factors that separate the above two. The unimproved land value is just the land without even considering the market demand for the site.
Let us understand it with an example, suppose a recent sale in Power Street, Wavell heights of a block of land sold for $625,000, the land value is $520,000.
The desirability of owning a block of land drives the price especially in the areas that have more facilities to provide like school catchment zones, parks, mountain view or any other scenic view etc.
Even though the scenic city views are taken into account, these factors cannot determine the market demand for the site.
It is also quite common for retail land to sell at a higher price because of being in the ready-to-build stage.
Another important point is that unimproved land value does not consider the improvements to the land as already said above but retail land value does take into consideration any changes made for the greater good.
How to Use Land Value When Purchasing Property?
When it comes to investing in property, it is wise to consider the value of land for future prospects because you may find later on that the land value reduces. However, the unimproved land value is generally greater.
There is one more aspect that you must look into and that is the land-to-asset ratio. We would like to understand the percentage of the purchase price that is made up of the land component versus the percentage made up of the house itself.
It means 76.6% of the purchase price is attributed to the value of land.
Property investors often target the land that has high land value because with time the land appreciates and the value of the house depreciates.
There are various tools to find the unimproved land value. If you do not want to use the tool, contact our experts at Raine and Horne, Land Victoria. Our team of professionals will help you look for the right piece of land, or investment property. To learn more about purchasing acreage in Victoria, reach out to us. We are here to help you.