Understanding the value of your property can sometimes be a tricky endeavour. You often hear terms thrown around, such as land value, unimproved land value, property value, market value and even purchase price. Today we’re going to focus on two of these – land value versus purchase price.

Land value vs purchase price

What is land value?

When people talk about ‘land value’ they’re usually referring to your land valuation. That is the value of your land as determined by the government. But there is another type of land value known as unimproved land value, which is actually quite different. Let’s take a look at both.

Land valuation

A land valuation is completed each year by your local government. They use this price to determine your rates and (in certain circumstances) land taxes. Because of that, it’s important information that you need to know about your home.

What do they look at when determining your land valuation? In Queensland, for example, they review the following:

Source: https://www.qld.gov.au/environment/land/title/valuation/about/considerations

See Queensland land valuation information.
See New South Wales land valuation information.
See Western Australia land valuation information.
See South Australia land valuation information. 
See Victoria land valuation information.
See Northern Territory land valuation information.
See Australian Capital Territory land valuation information.
See Tasmania land valuation information.

Unimproved land value

Unimproved land value is ‘the value of the land in its natural, undisturbed condition’. In general this is only used for rural properties or rural-residential properties. In most cases, people owning a residential home, will not have an unimproved land value. They’ll have a basic land valuation instead.

Read more: Regional Property Continues Country Mile Growth

What is purchase price?

As opposed to land value, purchase price is exactly what it says – the price that a genuine buyer in the market pays for your property. While you can’t determine the purchase price of your property until it’s actually sold, you can determine the market value price in advance.

Purchase price vs market value

The market value of your property – also known as the retail value – is the price that buyers are willing to pay for your property in the current market. This is determined by experts (like our team!) who understand market factors such as demand, scarcity, number of buyers, sellers’ strength and more.

Market value differs from purchase price as it’s an estimation, while the purchase price will be an actual dollar figure that your property sells for.

How does land value differ from purchase price?

Now we’ve seen that land value and purchase price are very different. While one is determined by the government on a set number of factors, the other is determined by buyers based on fluctuating market factors. However, both are important in their own way, but it’s the purchase price that will matter to you when looking to sell, purchase or refinance your home.

Read more: Home Loan Jargon Explained

We're ready to help

If you have any questions about your purchase price, your land value or financing for a new property purchase, we’re here to help. Our experts can work with you to help you understand both the potential purchase price of your new home and the land value of any home you’re looking to buy. (So you’ll know the rates you might be in for!)

Of course our team is always on hand to help you find the best home loans. With access to more than 40 of Australia’s biggest banks and specialist lenders you know you’ll get the best results!

Give us a call today at Lending Loop.