When property developers discuss land value, they refer to the monetary value of a piece of land; this excludes the value of buildings, infrastructure, and improvements to the land. In real estate, the concept of land value forms the basis of evaluating properties to determine the overall property value and land tax. So how do you determine the value of land in Australia?

Who Determines the Value of Land?

Land value is typically determined by licensed property valuers who are registered with the Australian Property Institute (API) and other relevant authorities. This assessment is critical for financiers to decide whether to offer finance to potential buyers or to refinance property for the landowner. The appraisal is based on many factors.

While a land valuer or appraiser is required to assist in the valuation, you should use property development software to assess specific aspects of the land as part of your due diligence report. Thanks to integrations with Domain, CoreLogic and BCI, Archistar gives you immediate access to the latest property market data, including median prices, sold properties, and nearby developments. This information isn’t only useful to land valuers. You can use it to identify precedents and trends in the area that would influence land value.

What Type of Land Requires Appraisal?

Ahead of a land purchase, knowing what kind of land you’ll need to get appraised to plan the financial aspects of property development is helpful. Though they may vary from state to state, these types of land typically require an appraisal.

  • Undeveloped land that is free of structures and infrastructure.
  • Developed land with infrastructure such as electricity, water, sewerage, gas, and road access.
  • Land that is unsuitable for construction due to flood and bushfire risk or needs to be preserved for heritage or environmental reasons.
  • Built land with structures or buildings such as flats, houses, industrial buildings, or commercial premises.
  • Building plots which can be developed as it complies with construction requirements and can support construction.

Factors Which Influence Land Value

Various factors and characteristics influence land appraisal; it is helpful to be familiar with them while looking for land to develop. Let’s discuss these factors.

Land Location

Location is one of the most critical factors in determining land value regarding access to amenities, transport, schools, and commercial centres.

Zoning and Regulations

Local zoning laws and planning regulations, which affect land use, can impact the value of the land by influencing its development potential.

Environmental and Legal Factors

The land’s value may be lower or higher due to environmental issues, legal restrictions, or encumbrances.

Property Size and Shape

The larger the plot of land, the more it may be worth; however, irregularly shaped properties or land that is challenging to develop may have a reduced value.

Property Market 

Valuers consider the current real estate market and trends. This information is specific to the demand and supply of land in the region.

Comparable Sales

Also known as the market approach, comparable sales refer to a comparison of the land to other land that has recently been sold in the same area, with similar characteristics, to estimate the value of the land.

Potential Use

The potential of the property to generate income plays a critical role in land valuation. This factor is typically more important if the property will be used for commercial or investment purposes.

Site Inspection

During a site inspection, a valuer considers the land’s unique features, topography, accessibility, and location.

It’s vital to note that the land valuation process may vary somewhat from one state or territory to the next. Rural or agricultural land may involve additional considerations related to farming, such as soil quality and access to water. As you await the completion of the land value appraisal, you can start working on your due diligence report. A free Archistar account provides access to critical data and advanced features beneficial to any property developer.