More property investors will be caught in the property tax net with the resurgent Sydney property market pushing up residential land values at a double-digit pace in the wake of historically low interest rates and the revived NSW economy.
Land values across the state rose 11.2 per cent in 2014, which was led by a strong 13.1 per cent rise in residential land values, according to data released on Friday by the NSW Valuer General.
Willoughby, Bankstown and Hornsby led the gains in residential land values across Sydney, with Mosman, Camden and Ryde witnessing the lowest rise in values among Sydney council areas.
The eastern suburbs regained the crown from the lower north shore as the area with the most expensive median land values in the state, with median residential land values in Woollahra, which takes in Double Bay, Point Piper and Vaucluse, reaching $1.4 million, eclipsing Mosman’s median of $1.39 million.
“The past 12 months has seen a significant increase in large parts of the market – particularly the middle ring,” said the NSW Valuer General, Simon Gilkes.
“There were not the large increases at the high end of the market and in the outer areas, but rather the inner west and areas close to transport, such as Chatswood and the Hills district, partly due to the new rail link.”
Low interest rates has brought both owner occupiers and investors into the market, he said.
The values are based primarily on property sales data, with more than 43,000 sales assessed.
The year was market by a “ripple out effect” from gains in the inner ring of the city’s suburbs, he said.
Median land values in areas such as Leichhardt and Marrickville continued to rise strongly – up 17.4 per cent and 19.9 per cent respectively – but this was outpaced by gains a little further out such as Canterbury – up 21.4 per cent – and Bankstown (up 29.4 per cent).
The updated valuation data will have a direct effect in broadening the land tax net, where it is applicable, and is also used by councils when assessing rate variations, Mr Gilkes said. At the top end of the market, the rise in land values have been more restrained which is due in part to the already high level of prices in those areas.
“The increases were not as strong in the highly valued suburbs since fewer people may have been able to raise the money needed” to buy into these suburbs, Mr Gilkes said.
Slavko Romic, the principal of Elders Double Bay, said the new year has started where last year finished.
“It’s been strong since the start of the new year. Inquiries are running at peak levels, and we’re not alone with other agents reporting the same level of activity,” he said.
“There is not a lot of stock available, so over-demand and under-supply, along with low interest rates, is keeping interest high.”
A year ago, only Mosman and Woollahra had land values of more than $1 million. Now, they have been joined by Willoughby, Manly, Hunters Hill and Waverley, with North Sydney and Lane Cove just falling short of this figure.
The updated valuation data are used by about one third of councils each year when revising rates. This year, Blacktown, Liverpool, Ku-ring-gai, the Hills, Maitland and Leichhardt will use the updated data when setting rates.