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March 2014 Market Value Reports in a Rising Market

The latest release of ABS data shows an average increase of 10.9% in values since March 2013 across the 8 Capital Cities with Sydney leading the way. So in a rising market how do you establish market value?

The latest release of ABS data shows an average increase of 10.9% in values since March 2013 across the 8 Capital Cities with Sydney leading the way.

May2014marketupdate

 

So in a rising market how do you establish market value?

Some property investors have recently tested the digital research tools at their disposal such as property value “Guestimates” provided by bank sponsored websites & apps.

These reports are known as AVM’s or Automated Valuation Modelling.

A question which is cropping up more regularly from our clients confused by the outputs from these tools is “How reliable are these numbers?”.

Our clients have reported that after using an AVM as a basis for their bidding guide at auction, the sale price was not even within the range produced by the AVM!

Why? Well, property specific attributes such as condition of the building, building configuration, environmental considerations, redevelopment potential and views etc are typically not available to the AVM hence will produce a result which does not take into account these factors. Further, in rising markets, the delay in reported data has also been providing a misleading outputs for buyers.

Based upon our client feedback, an AVM is no replacement for a Property Valuation completed by a Certified Practising Valuer, which reflects the latest market movements and specific property attributes and remains the strongest tool in a buyers toolkit!