An updated survey of factors influencing property valuation accuracy in Australia

Abstract

PurposeThis study updates and extends the current work on the issue of accuracy of property valuation. The paper investigates the factors that contribute to property valuation inaccuracy and examines different strategies to achieve greater accuracy in practice.Design/methodology/approachAn online questionnaire was designed and administered on the Australian Property Institute (API) registered valuers, attempting to examine their perceptions on the current state of valuation accuracy in Australia. The variables/statements from responses are ranked overall and compared for differences by the characteristics of respondents.FindingsUsing mean rating point, the survey ranked three factors; inexperience valuers, the selection, interpretation and use of comparable evidence in property valuation exercise and the complexity of the subject property in terms of design, age, material specification and state of repairs as the most significant factors currently affecting valuation inaccuracy. The results of a Chi-square test did not, however, show a significant statistical relationship between respondents' profile and the perception on the comparative importance of the factors identified. Except for valuers' age and inexperience valuers and valuers' educational qualification and inexperience valuers and the selection, interpretation and use of comparable evidence in property valuation exercise. Also, the three highly ranked strategies for reducing the level of inaccuracy are: developing a global mindset, use of advanced methodology and training valuers on market forecasting skills.Practical implicationsIn order for valuers to provide state-of-the-art service to the public and to remain relevant, there is a need to accurately and reliably estimate valuation figures. Hence, the strategies highlighted in this study could be considered in a bid to reduce property valuation inaccuracy in practice.Originality/valueThis study provides an updated overview of the issue of property valuation inaccuracy in the Australia valuation practice and examines the strategies to reduce it.

Valuation accuracy in the residential property markets in Minna and Abuja, Nigeria

“…In the residential property market in Abuja, inappropriate valuation methodology is perceived as the leading cause of valuation inaccuracy and is ranked first as shown in Table 9. This outcome is in tandem with those of Babawale ( 2013), Oduyemi et al (2016), Aliyu et al (2018) and Abidoye et al (2021) who earlier found that use of inappropriate valuation methods is a crucial cause of error in property valuation. Babawale (2021) argued that certain valuation methods are more susceptible to errors than others with experts and professionals in the academia criticising the conventional methods of valuation for being irrational and illogical.…”

“…(2016), Aliyu et al. (2018) and Abidoye et al . (2021) who earlier found that use of inappropriate valuation methods is a crucial cause of error in property valuation.…”

“…,Aliyu et al (2018),Nwosu (2019),Atilola et al (2019) andAbidoye et al (2021) as presented in Table1. These opinion statements were measured using 5-point Likert…”

The Impact of Job Satisfaction on Valuers’ Attitudes Towards Professional Ethics

“…They characterise, among others, gender, education, professional experience, the level of pressure felt by the respondent, as well as the specificity of property valuations performed by the valuer. This set of control variables was derived from previous studies that analysed the professional activity of real estate valuers (see for example, Małkowska et al, 2019;Abidoye et al, 2021). Due to this research's international character, we added a dummy variable characterising the respondent's country.…”

Are there some skills valuers will ‘no longer need to learn’ in the digital technology environment?

“…Mention can be made of how the world financial system relies heavily on property values produced by valuers to the extent that the domino effect of poor valuations easily triggers global financial crises (Alexandridis et al, 2019). Nonetheless, there are many questionable issues of valuation quality (Amidu et al, 2021;Newell, 2004;Titman & Trueman, 1986) arising from a litany of causes such as valuation variance, valuation errors (Abidoye et al, 2021;Adegoke, 2016;Babawale, 2013;Boyd & Irons, 2002;Bretten et al, 2001;Crosby, 2000;Dou et al, 2020;Effiong, 2015;Otegbulu & Babawale, 2011;Su, 2022), client influence (Amidu & Aluko, 2007;Cloyd & Spilker, 1999;Levy & Schuck, 2005;Newell, 2004;Nwuba et al, 2015), and the opaqueness of property transactional information upon which valuation opinions are based (Cloyd & Spilker, 1999;Levy & Schuck, 2005;Newell, 2004;Olapade & Olaleye, 2018;Su, 2022). These issues continue to stick to property valuation practice thereby derailing the progress of the valuation profession toward full operational efficiency.…”