NEW land value estimates by the NSW Valuer General reflect the continuing gentrification of Newcastle's inner suburbs, and the stagnation of property prices across various outer suburban areas.
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To enable local councils to set land rates, the valuer general must issue new tables of unimproved land values every three years at least.
The new tables record an average land rise in both Newcastle and Lake Macquarie of just under 15 per cent in the three years to July 2019, but with substantial variations from suburb to suburb.
The government-funded Revitalising Newcastle program was designed to attract property investment, and inner city areas head the regional list, with Newcastle West up by more than 50 per cent and Newcastle East by almost 45 per cent.
Increases in Lake Macquarie were more even, with Martinsville recording the biggest rise, at 30 per cent, and all but a handful of suburbs having double-digit increases.
The new land values do not mean that rates will rise by the percentages indicated.
But the rates paid on increasingly valuable properties are likely to rise by more than those in less favoured areas, based on the "ad valorem" (or perceived value) part of each council's rate calculations.
Like most councils, Lake Macquarie and Newcastle use a "base rates" system. Up to 50 per cent of the amount charged is comprised of fees for services such as garbage, with the other 50 per cent (or more) being the ad valorem component.
Under this system a council may impose a 'base' amount that is the same dollar value for everyone but they must then add additional rate per dollar of land value. In this system, the total rates raised by the council from the base component cannot exceed 50 per cent of the total rates raised in the area.
- NSW Office of Local Government
Rate "pegging" means councils need approval from the government's Independent Pricing and Regulatory Tribunal to increase by more than 2.4 per cent annually.
Both councils have won this approval in recent years and should be in strong financial positions, an important consideration given the substantial but still uncertain impacts of the coronavirus-driven shutdown on the economy.
The COVID-19 downturn will have already hit many ratepayers financially, and most property analysts believe it will usher in a substantial fall in property prices.
In the same way as the 2016-19 valuations show that properties do not rise equally in price, COVID-driven falls will likely vary from suburb to suburb if the market slides as a whole.
Amid such uncertainties, pre-coronavirus values of a range of commodities and assets may well be already out of date.
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