How We Calculate Property Values at Property Pricer

Last Updated, December 4, 2024
Written by <a href="https://propertypricer.com.au/author/jim/" target="_self">Ross McLelland</a>

Written by Ross McLelland

How We Calculate Property Values
The Australian Tax Office (ATO) now expects solid evidence to support property valuations - particularly in Self-Managed Super Funds (SMSFs).

At Property Pricer, we understand how important it is to provide accurate, up-to-date, and thoroughly substantiated property valuations. When it comes to SMSFs and other property investments, both auditors and the Australian Tax Office (ATO) frequently request evidence that supports the stated value of a property. Our methods are designed to meet these requirements by combining statistical rigour and current market data.

Our Approach: Regression Analysis

We begin our valuation process with a powerful statistical tool called regression analysis. This helps us identify and measure the factors that influence property prices. By doing so, we create a mathematical model that can predict a property’s market value based on its unique features and local market conditions.

We tailor our formulas to each state and capital city to reflect their distinct property markets. This ensures that our models are as accurate and relevant as possible to your property’s specific location.

Key Factors Considered

In property valuation, the main goal (the “dependent variable”) is to determine the property’s market value. To do this, we consider various “independent variables”—key property features and external factors that influence its worth. These include:

  • Size: Land area, building size, and the number of storeys.
  • Layout & Condition: Number, size, and quality of bedrooms, bathrooms, and kitchens, including how recently they’ve been renovated.
  • Age & Style: The property’s age, architectural style, building materials, and overall condition.
  • Renovations: Internal or external improvements and updates.
  • Neighbourhood: Proximity to parks, public transport, shops, cafés, and consideration of local noise levels.
  • Features & Amenities: Pools, gardens, garages, outdoor entertaining areas, workshops, or granny flats.
  • Views & Frontage: From waterfront vistas to typical street views.
  • Market Conditions: Local supply and demand, recent median price growth, days on market before sale, and short-term value trends.
Property Factors

The Property Ranking Level (PRL)

From Features to Figures: We don’t rely solely on comparisons. Instead, we first calculate the non-monetary value of a property’s unique features and characteristics. From this, we determine a “Property Ranking Level” (PRL), which reflects how a property compares to all other properties on a broad range of factors.

The Suburb/Town Value Level (SVL)

Incorporating Market Data: Next, we tap into extensive and detailed national sales data to ground our calculations in real-world evidence. By applying regression analysis to both the PRL and the local market’s “Suburb/Town Value Level” (SVL), we convert the PRL into a monetary figure.

For example:

  • Suppose a property’s PRL is 6/10 and the SVL is 5/10, representing an indexed location value of $125,650.
  • Property Value = 6 x $125,650 = $753,900

Regression chart of property levels and sold prices
Example of our regression analysis, chart showing a sample of 7 sold property prices (on the vertical axis) versus their Property Ranking Level (PRL) (on the horizontal axis)

Fine-Tuning with Comparable Sales

Once we’ve established a baseline value using regression analysis, we refine it by reviewing at least three comparable properties sold recently – ideally within the last three months. These comparisons are the icing on the cake that ensure our valuation aligns closely with current market conditions.

This step is critical. Older sales data, more than four months old, may not reflect current trends, especially in fast-changing markets. By using the most recent sales, we meet the strict standards expected by auditors and the ATO and maintain the highest possible accuracy.

Staying Ahead in a Changing Market

We understand that property markets can shift rapidly. Locations like Brisbane, Adelaide, and Perth are experiencing significant growth, while other areas may remain stable or even decline.

Because most sales data can be up to three months old, we apply extra vigilance. We consider changes in median values over the last three and six months, as well as the median number of days a property stays on the market before selling. This ensures our valuations reflect the current reality, not outdated figures.

Some recent examples (as of December 2024):

  • Kelso, Townsville: Increased by 37% over 12 months and 11% since June. On a $500,000 house, that’s an extra $55,000 in value. Properties sell in just 12 days, well below the 30–60 day average.
  • Cannington, Perth: Up 27% over 12 months and 5% since July. On a $600,000 house, that’s an extra $30,000. Properties sell in only 9 days.
  • Brunswick, Melbourne & Cronulla, Sydney: Brunswick is down 3% over 12 months. Cronulla dropped by 17% and now has 60+ days on market—evidence that not all markets are booming.

Our Commitment to Quality

Our valuation method is about more than just crunching numbers. It’s about providing you, your auditors, and if necessary, the ATO, with a solid foundation of evidence and transparency. By combining rigorous statistical analysis, current market insights, and carefully selected comparable sales, we deliver valuations you can trust.

This is how we ensure every report from Property Pricer meets the highest standards of accuracy, reliability, and relevance. Empowering you to make informed property decisions with confidence.

Download a SAMPLE Report

Download a Property Pricer Sample Report and see how we can help you.

Order a Property Pricer Report

Submit your property details via a short form, and we'll send you your property valuation report...usually the same day!

CTA PropertyPricer
Trust Pilot

See what our clients have to say...

trustpilot stars Green
I am very pleased with the extra effort

I am very pleased with the extra effort they took to get the valuation accurate for a unique property that was much better than the description. They even rang an estate agent to get local knowledge about the property. After re-valuing the property they rang me to discuss to make sure I was happy. That's why we will continue to use PP for responding so quickly and being so helpful and not trying to tell me I was wrong as others I have dealt with in the past have done.

Simon Lee - Argentino Lee Accounting

trustpilot stars Green

The service is very efficient

The staff are friendly. The valuations provided are accepted by our SMSF auditors. All very good - a company we are happy to work with.

Ed Eikelboom - Oaktree Accounting

trustpilot stars Green

Fast, comprehensive...and accurate!

PropertyPricer was fast to respond to my request for a valuation report. I received the report within 24 hours of applying. The valuation report is easy to read, concise and covered everything I needed to provide my auditor.

Katie Steele - Crystal Wealth

trustpilot stars Green

Great tool for property

Your reports are the best I have seen, no irrelevant ’fluff’, and good supporting data. Auditors are going to love you.

Wald Warzynuik - My SMSF Auditors

 

Pin It on Pinterest