The requirements for statutory valuations are that they are fair and equitable so that these characteristics also pertain to the taxes based on the valuations. It is also preferable that statutory valuations are close to market values so that there is a reasonable level of transparency in the valuation process and the general public can have confidence in the statutory valuation outcomes.
It is also important that the statutory valuation process is relatively inexpensive so that the associated taxes are reasonably efficient.
In New South Wales, annual Land Valuations are produced for approximately 2.5 million properties. A very natural question is: “What is the place for Automated Valuation Models (AVMs) and Computer Aided Mass Appraisal (CAMA) in the statutory valuation process?”.
The paper will examine this basic question and others which follow from it, including:
- What is the balance between reduced cost and the consistency and accuracy of valuations?
- What should be the complexity of the underlying model(s)?
- What are the associated data requirements for different categories of properties (zonings)?
- To what properties can an AVM be applied and where should other valuation methods be used?
Examples from the NSW land valuation process will be considered.