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How agents can better analyse declining rental yields by examining the Unimproved Capital Value

Promoted by National Property Group
14 April 2023 | 4 minute read
Unimproved Capital Value   Image nrhkvc

Promoted by National Property Group.

As land values climb and house prices stall, National Property Group delivers innovative tactics to assist investors in this perplexing market scenario.

We are seeing a disturbing trend in the market where house prices are flat or declining, yet land values are climbing.

Don Harb, Chief Data Officer at National Property Group, found some interesting trends that do not seem to correlate with the market. We are seeing land values going up at a much higher rate than house values.

In Australia, unimproved land value refers to the value of the land without structures, while house value will factor in any additional structures or improvements. This value is used to calculate land tax, an annual tax payable by property owners. The tax is mostly for rental properties and exempted for primary residences in most jurisdictions.

Don Harb looked at several suburbs with a high percentage of rental properties. As an example, Blacktown (a suburb in the west of Sydney) saw an increase of 5% in the median house prices over the last 5 years, yet the median unimproved capital value increased by 33%.

Generally, if the unimproved land value increases, the land tax and rates payable will also increase, which can reduce the rental yield for the property owner. This scenario makes it more challenging for property investors to generate a positive cash flow from their investment, which may have a flow-on effect of higher rental prices and a decrease in rental availability for consumers as investors look for better yields.

National Property Group can help real estate agents assist investors to navigate the current landscape by providing alternative investment options such as knockdown rebuild with our multi-lot mapping technology. Our property data platform can also provide insights into areas with capital growth potential.

Agents should also consider working with their landlords in collaboration with developers when reviewing investment options. Rob Flux from Property Developer Network with thousands of potential and aspiring developers in his network, says developers are always on the hunt for agents that understand the potential options, he categorises these opportunities in three distinct ways. Done with you - Passive investor; Done for you - Semi Passive investor, Done by you - Active investor.

Working with your investors and developers of course is always a long game, National Property Group's powerful data platform provides real estate agents and developers, advanced tools when assessing a property's suitability for development. This insight allows agents to help maximise their clients' returns while helping them to navigate a changing market.

CLICK HERE NOW to transform your investment strategy with National Property Group's data platform.

How agents can better analyse declining rental yields by examining the Unimproved Capital Value
Unimproved Capital Value   Image nrhkvc
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