Cairns Post, Tuesday, 7th March 2017 – Hayden Smith

Builders say ‘conservative’ figures are slowing growth

NEW HOME VALUE CHAOS
Experts rejects developers’ claims that low property valuations are to blame for big slump in Far North building approvals.

PROMINENT Cairns construction industry figures believe “conservative” property valuations are needlessly stunting the region’s growth. Value Homes director and Master Builders Queensland president Ralf Dutton said Cairns’ post-GFC recovery was being “held to ransom” by the repeated undervaluation of properties – a claim firmly rejected by Herron Todd White Cairns director Damien Johnston. But Mr Dutton, who has more than 40 years of building industry experience, said “poor valuation practices” were crashing home loans and costing Cairns millions of dollars in lost contracts every month.

“Some first homeowners … are being pushed into financial stress in having to take out personal loans to cover the short-fall,” he said. “We have found valuations varying by 20 per cent between one bank’s panel valuers. This chaos has to stop. “This large amount of lost work has driven down building approvals, when rents are rising and are at near record stress levels because demand to build is so high.” The Cairns Post reported last week that the region had experienced a 53.8 percent decline in building approvals from December 2014-16.

Mr Dutton said some valuers were undervaluing local properties by tens of thousands of dollars. Cairns is classified as a “rising market” under the Herron Todd White national property clock, which he said showed the region was primed for “sustained development”. “Lenders, buyers, sellers, builders and renovators are being restricted,” Mr Dutton said. “We need a public forum to bring the enormity of this to the forefront, show how damaging this is to the welfare of Cairns and plan the best way to put this city’s (post-GFC) recovery back on track.”

Cairns developer Terry Conlan agreed, saying value was “being lost” in the region. “We’ve had many sales fall over because they couldn’t be valued up,” he said. But Mr Johnston said the role of valuers was to interpret – not set – the market. “Valuations are based on recent, settled sales of similar properties in the area, coupled with current market conditions and direction,” he said. “The process is an unbiased, objective approach to value using the same means and techniques as any prudent purchaser would use when looking to buy a property. This information is readily available to anyone and, to suggest valuers are to blame for low valuations, is akin to blaming the doctor for catching the flu. To suggest that valuers are holding back all sales, particularly when they are involved in only a small percentage of purchases, demonstrates a poor understanding of the marketplace and valuation process.”

FAR Northerners have reacted with shock upon finding out their dream homes were in jeopardy through “undervaluation”. Newlyweds Zach and Caitlin Donohue saved $45,000 for a deposit on their first home, which they planned to build at Bentley Park, only to be told by the bank that the house and land package had been valued about $85,000 short of the contract price. Taking out a personal loan to cover the shortfall was not an option for the young couple. “I’d been doing overtime just to save up for this giant deposit,” said Mr Donohue, an electrician. “We were pretty shocked, and are not quite sure what we’ll next.” Antony Gabassa was also left frustrated after the Gordonvale home he planned to buy was valued $20,000 shy of the figure needed. “I then went and bought somewhere else, and the valuation again came back about $20,000 under,” the 40-year- old said. “It only went through because the builder dropped $20,000 off the price.”

“I agree with Mr Johnston that ‘the role of valuers was to interpret -not set- the market’ but that is exactly what some valuers are doing. They are pushing the market down by making valuations 20% lower than other valuers.”
– Ralf Dutton