What's my house worth? Guide to calculating property value
- A home’s value is shaped by buyer demand, local sales, and market conditions, not just the property itself.
- Property values can be estimated in several ways, from online tools to professional valuations, with each method suited to different needs.
- Knowing your home’s value can impact major financial decisions, including selling, refinancing, and accessing equity.
If you're considering selling your home, refinancing your mortgage, or tapping into your home equity, you'll need a clear idea of how much your property is worth. That can be tricky, as a home's value depends not just on the property itself, but on buyer demand and broader market conditions at the time.
How can I find out how much my house is worth?
Resources provided by Cotality and sites like realestate.com.au and Domain allow homeowners to track property values. However, it's worth remember such data are indicators of the market, not facts.
If you're wanting to go down a more official route, there are a number of different ways to value a property and which one best suits your needs will depend on what you need the valuation for:
- Basic valuations
These use local sales and market reports to estimate a home's worth. These are commonly provided by real estate or finance websites. - Agent appraisals
Provided by a real estate agent. These are generally an 'educated guess' based on the agent's experience in a given market and can be helpful when you're considering listing your home for sale. - Bank valuations
Bank valuations are official documents typically performed by a professional valuer and often place a home's value at less than it would ultimately sell for. These are generally needed when applying for a new home loan or refinancing. - Desktop or automated valuations
More and more lenders are beginning to value properties virtually, using historical sales data, rather than sending a valuer out, saving both time and cost. - Insurance valuations
These are often used to determine how much it would cost to rebuild a home if the worst were to happen. They don't reflect a home's market value. - Offers to purchase
Of course, the most accurate valuations will come from the market. Generally, the highest bid put forward by a buyer is considered to be a property's true value.
There are a number of other factors you may consider when pondering a property's value, including:
Location
Location is generally the key determinant influencing property value. Those in city-adjacent locations, coastal or leisure areas, good school zones, or with convenient public transport links generally command larger values.
Availability also comes into play when it comes to location. Generally, individual properties are worth more if there is limited options and high demand for homes in an area. On the other hand, a lack of buyer demand or too many houses on the market can reduce the value of properties in a suburb.
While you can't simply move your property, the desirability of areas can come in and out of fashion, hence suburbs are often described as 'up-and-coming'.
If you're wondering what your property's worth, the first place to start is by looking at how much similar properties in the same area are selling for. Be careful to be objective - buyers tend to care about small differences that owners often overlook.
Property condition
The better the overall condition of your property, the more it's likely valued at.
This includes how structurally sound the property is - reducing cracking, having strong foundations, and a secure roof often boosts a property's value.
Additionally, homes that need a facelift are generally considered to be in a different market to those that are renovated or well-maintained. After all, a buyer looking for a fixer-upper probably won't consider a ready-to-move-in property, and vice versa.
Size, layout, and property type
The size and layout of your property also plays a key role in its value. Generally speaking, the more bedrooms, bathrooms, and car parking a property offers, the more valuable it is. In saying that, many buyers will choose location over size and layout.
Additionally, properties on freehold titles (houses) more often than not come at a premium price to strata titled properties (apartments, units, and townhouses). That's partly because freehold titles come with the land under the home and partly because some buyers avoid body corporate setups.
Savings.com.au's two cents
There's no magical tool or sum that can determine exactly how much your property is worth (without putting it out to the market, that is). That said, there are a number of factors that can provide you with a good idea of a house's worth - perhaps most telling are local sales of similar properties.
A professional property valuation or real estate appraisal can also provide details on your home's potential worth.
Keeping tabs on your property's value is important. If it's grown since you purchased, you might be able to access home equity or refinance to a more competitive home loan, potentially saving you thousands.
Why should I track the value of my home?
Tracking your property's value allows you to keep your finger on the pulse of your net worth, home equity, and loan-to-value ratio (LVR). All these factors can have significant implications for your financial future.
Additionally, by tracking property values in your area, you'll begin to develop a sense of market trends. That could put you on the front foot if you decide to sell your property down the track.
Can my property's value impact my home loan?
Bank valuations are used to determine your LVR when applying for a home loan. Most lenders limit how much they'll provide a buyer based on their borrowing power, the value of their home, and the size of their deposit.
For instance, if borrowing power allows, a buyer with a $40,000 deposit will likely be able to purchase a home worth $800,000, which would give them an LVR of 95% (the max allowed by many lenders). If that same borrower only had a $20,000 deposit, they may only be able to spend $400,000 on a property.
Higher LVRs also generally attract higher interest rates, which can add significantly to the overall cost of a mortgage.
But bank valuations are typically for mortgage purposes only and shouldn't serve as a reliable point-of-call for the state of the current property market and a property's ultimate value.
If your properties value increases, your LVR may decrease. This could see you pushed into into a lower LVR tier, presenting an opportunity to refinance your home loan to one with a more competitive interest rate or more attractive features.
Here are some of the most competitive home loans currently available on the market for owner-occupiers:
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.94% p.a. | 5.98% p.a. | $2,978 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.89% p.a. | 5.80% p.a. | $2,962 | Principal & Interest | Variable | $0 | $0 | 80% |
| Promoted | Disclosure | ||||||||||
5.99% p.a. | 6.02% p.a. | $2,995 | Principal & Interest | Fixed | $0 | $0 | 60% |
| Promoted | Disclosure | ||||||||||
5.93% p.a. | 5.93% p.a. | $2,975 | Principal & Interest | Variable | $0 | $395 | 70% | Disclosure |
