Plain English explanations of common property valuation terms used in valuation reports, professional practice and market evidence. Some terms may also appear in legislation or revenue-office material, but legal interpretation should be confirmed with the appropriate adviser.
This glossary is general information only. It is not valuation, legal, taxation or financial advice. Terminology can vary between jurisdictions and should be read in the context of the relevant report, instruction, legislation and professional standard applying at the valuation date.
Professional Designations, Bodies and Standards
Australian Property Institute (API)
A professional membership body for property professionals in Australia. The API provides membership pathways, certifications, professional standards, guidance and continuing professional development for its members.
Certified Practising Valuer (CPV)
A professional certification commonly associated with the Australian Property Institute. A CPV is a valuer who, by education, training and experience, is qualified to undertake valuations of real property within the scope of the valuer’s competence and instructions.
Professional Standards Scheme
A statutory professional standards framework that may limit occupational liability for eligible participating members if required conditions are satisfied. It should not be described as an insurance policy.
International Valuation Standards (IVS)
An international valuation standards framework used to promote consistency in valuation practice. Australian valuation reports may refer to IVS where relevant, as well as applicable Australian professional standards and reporting requirements.
Valuer-General
A statutory valuation authority or office responsible for government land valuation functions within a state or territory. Statutory land values are commonly used for rates, land tax or government charging purposes and are not the same as a formal market valuation of an improved property.
Valuer
A person who assesses the value of property or property interests. For formal valuation purposes, the valuer’s qualifications, certification, scope of work, independence, inspection basis and report reasoning are critical.
Real Estate Agent Appraisal
An estimate or opinion commonly prepared for sale or listing purposes. It is not the same as a formal independent valuation prepared by a qualified valuer for a stated purpose and valuation date.
Bases of Value and Value Concepts
Market Value
The estimated amount a property would exchange for at the valuation date between willing, informed and prudent parties acting at arm’s length after proper marketing and without compulsion. Market Value is not automatically the same as the contract price, owner expectation, bank assessment, statutory land value or online estimate. See also: What is Market Value?
Market Rent
The estimated rent a property or space would lease for at the valuation date between a willing lessor and willing lessee, on appropriate lease terms, after proper marketing and without compulsion.
Unencumbered Value
The value of property disregarding certain legal or financial interests that may affect ownership or transfer, such as a mortgage or non-market lease, depending on the purpose of the valuation and the relevant legislation or instruction.
Vacant Possession Value
The value of a property assessed as if it can be sold with the buyer able to occupy or lease the property without an existing tenant remaining in possession, unless otherwise stated.
Subject to Lease Value
The value of a property assessed having regard to the existing lease terms, tenant, rent, expiry, options, incentives, outgoings and risks associated with the lease.
Investment Value or Worth
The value of a property to a particular owner or prospective owner having regard to that party’s own investment objectives, tax position, financing, risk appetite or operational needs. This is not the same as Market Value.
Special Value
Additional value that a particular buyer may attribute to a property because of circumstances specific to that buyer, such as adjoining ownership or a strategic need. Special Value is generally excluded from Market Value unless specifically instructed.
Going Concern Value
The value of an operating business or specialised asset where property, business operations, licences, goodwill and other assets may be considered as part of an overall enterprise. It should not be confused with ordinary real property Market Value unless the valuation basis clearly requires it.
Replacement Cost
The estimated cost to replace an improvement with an asset of similar utility, after considering the relevant assumptions, construction standard and valuation purpose. It is not automatically the same as Market Value.
Insurance Replacement Estimate
An estimate used for insurance-related purposes. It may include building replacement cost, demolition, professional fees, statutory costs, escalation and other allowances depending on the instruction. It is separate from Market Value.
Dutiable Value
For transfer duty or stamp duty purposes, the relevant revenue authority may assess duty by reference to the greater of consideration and market or unencumbered value. Related-party transfers, nominal consideration and non-arm’s length transfers often require stronger evidence of value.
Valuation Approaches and Evidence
Direct Comparison Approach
A valuation method that analyses sales of comparable properties and considers differences such as location, land, building area, accommodation, condition, quality, views, parking, zoning, lease terms and sale circumstances. It is commonly the primary approach for residential property.
Income Approach
A valuation method that assesses value by reference to income, such as market rent or passing rent, and investor return requirements. It is commonly used for income-producing commercial, retail and industrial property.
Capitalisation Approach
A form of income approach where a stabilised or maintainable net income is capitalised at an appropriate market-derived yield to indicate value.
Discounted Cash Flow (DCF)
A valuation technique that discounts projected future cash flows to a present value. It is commonly used where income, vacancy, incentives, capital expenditure or development timing require more detailed modelling.
Summation Approach or Cost Approach
A valuation method that considers land value plus the depreciated contribution of improvements and ancillary items. For residential property, it is commonly used as a secondary cross-check rather than a substitute for sales evidence.
Residual Land Value
A method used mainly for development property where the value of land is inferred from the expected completed value less development costs, finance, profit, risk and other allowances. It is highly sensitive to assumptions and should be treated cautiously where inputs are not well supported.
Comparable Sale
A sale used as market evidence because it has relevant similarities to the property being valued. Not every nearby or recent sale is comparable.
Analysed Sale
A sale that has been reviewed for attributes, contract date, settlement, condition, land area, building area, inclusions, lease position and sale circumstances before being used as evidence.
Arm’s Length Transaction
A transaction between independent parties acting in their own interests, without special relationship, undue pressure or non-market motivation affecting the price.
Adjustment
A qualitative or quantitative allowance made when comparing a sale to the subject property. Adjustments should be supported by market evidence, paired sales, professional judgement or clearly explained reasoning.
Paired Sales Analysis
A method of comparing sales that are similar except for one major attribute, to infer the market contribution of that attribute. It is useful where the evidence is reliable but can be misleading where the sales are not otherwise comparable.
Quantum of Value
The broad value level or price bracket indicated by the sales evidence before fine adjustments are made. It helps prevent over-reliance on narrow rate calculations where the market is driven by overall property appeal.
Sales Reconciliation
The valuer’s reasoned conclusion after weighing the comparable evidence. It should not be a simple average of sales or rate indicators.
Rate per Square Metre
A value indicator calculated by dividing a sale price or value by land area, living area, building area or lettable area. It is useful as a cross-check but can be misleading if applied without context.
Market Evidence
Sales, rents, listings, market commentary and other data used to support a valuation opinion. Strong evidence is recent, comparable, verified and relevant to the valuation date.
Outlier Sale
A sale that sits outside the main body of evidence because of unusual conditions, superior or inferior attributes, non-market motivation or incomplete information. Outliers should be explained if included or excluded.
Report Scope, Inspection and Uncertainty
Scope of Work
The agreed parameters of the valuation assignment, including the property interest, purpose, valuation date, basis of value, inspection basis, information relied upon, assumptions, limitations and intended users.
Date of Valuation
The specific date at which the valuation opinion applies. A valuation is tied to that date because market conditions and property circumstances can change.
Date of Inspection
The date on which the property was inspected. This may differ from the valuation date, especially for retrospective valuations or updated reports.
Internal Inspection
An inspection that includes the interior of the property, allowing the valuer to observe accommodation, condition, layout, finishes, defects, presentation and other internal features relevant to value.
External or Kerbside Inspection
An inspection limited to the exterior or street view of the property. It does not allow the valuer to verify internal condition, layout, finishes, inclusions or defects.
Desktop Assessment
An assessment prepared without physical inspection, using available records, sales evidence, images, plans and information supplied. A desktop assessment has a more limited scope and may not be suitable for some formal purposes.
Retrospective Valuation
A valuation prepared as at a past date. It is commonly required for Capital Gains Tax, deceased estates or historical Family Law matters and depends on evidence that existed or would reasonably have been known at that date.
Current Market Valuation
A valuation prepared as at a current valuation date, reflecting current market conditions and the property’s condition and circumstances as assessed under the instruction.
Assumption
A matter accepted as true for the purpose of the valuation because it is reasonable in the circumstances or outside the valuer’s direct verification. Assumptions should be disclosed where they may affect reliance.
Special Assumption
An assumption that is not necessarily true at the valuation date but is adopted for a specific purpose, such as valuing as if works are complete or as if a lease has been varied.
Limiting Condition
A stated limitation in a valuation report that explains what the valuer has not investigated or verified, such as structural adequacy, contamination, pest infestation, survey boundaries or legal advice.
Material Uncertainty
A disclosure used where market conditions or available evidence create elevated valuation uncertainty. It does not remove the valuation opinion, but it warns that less certainty should be attached to the figure than in normal market conditions.
Reliance
The right of a named client or permitted user to rely on the valuation for the stated purpose. A valuation prepared for one purpose should not be reused for another purpose without the valuer’s written agreement.
Valuation Range
A range of value used where a point estimate is not appropriate or where the scope is limited. A range may be wider where there is no internal inspection, limited evidence, unusual property attributes or uncertain assumptions.
Material Change
A change in the property, market or available evidence that may affect the valuation after the valuation date or report date.
Automated Valuation Model (AVM)
A computer-generated estimate of property value based on available data and modelling. It cannot verify condition, internal features, defects, legal interests or market nuances and is not a substitute for a formal valuation.
Purpose-Specific Valuation Terms
Capital Gains Tax (CGT) Valuation
A valuation used to support market value for tax purposes, often as at a historical acquisition, inheritance, first income-producing use or other relevant CGT date. The valuation should state the relevant date, basis, evidence and assumptions. See also: Capital Gains Tax Valuations
Cost base
A taxation amount calculated under the applicable CGT rules. Market value can be an input in some circumstances, but a valuation report does not determine the taxpayer’s complete cost base. See market value versus cost base and ITAA 1997, section 110-25.
Pre-CGT asset
An asset generally acquired before 20 September 1985 that meets the statutory conditions for pre-CGT status. The 2027 transition means the term should not be treated as a permanent exemption from all future gains. An accountant or tax adviser should confirm the asset’s treatment. See the 2027 CGT valuation guide, section 149-10 and the transition provisions in the 2026 Act.
2027 CGT deemed sale and reacquisition
Statutory treatment of relevant assets as sold immediately before 1 July 2027 and reacquired on that date. Market value is the default transition basis, subject to the statutory alternative. The effective valuation date is separate from when a report is commissioned. See the 2027 CGT valuation guide and the 2026 Act.
Stamp Duty or Transfer Duty Valuation
A valuation used to support dutiable value where required by a revenue authority, commonly for related-party transfers, transfers for nominal consideration, family transfers or other non-standard transactions. See also: Stamp Duty Valuations
Family Law Valuation
A valuation prepared for matrimonial or de facto property settlement purposes. The report may be party-instructed or prepared by a single expert, and should clearly state the instructions, valuation date, property interest, assumptions and report limitations. See also: Family Law Valuations
Single Expert Witness
An expert appointed jointly by parties or by the Court to provide independent expert evidence. The expert’s role is to assist the Court, not to advocate for the party paying or instructing the expert.
Party-Instructed Expert
An expert instructed by one party rather than jointly. The report may still need to satisfy expert evidence requirements if it is to be relied upon in proceedings.
Deceased Estate or Probate Valuation
A valuation prepared for estate administration, probate, distribution or taxation purposes, often as at the date of death.
SMSF Valuation
A valuation prepared for self-managed superannuation fund reporting or audit purposes. It should be based on objective and supportable data, with the valuation date, assumptions and evidence clearly recorded.
Pre-Sale Assessment
Advice prepared to assist an owner before sale. It may be less formal than a full valuation depending on the instruction and should not be used for tax, court or revenue purposes unless prepared for that purpose.
Mortgage Security Valuation
A valuation prepared for a lender to assess property security for loan purposes. It is usually instructed by the lender or its panel manager and is not the same as a private valuation report prepared for an owner.
Rental Review Valuation
A valuation or determination of market rent for lease review purposes. The lease wording, review mechanism, permitted use, incentives, outgoings and market rental evidence are critical.
Property Types and Asset Classes
Residential Property
A dwelling or land used or zoned for residential purposes. Includes houses, townhouses, units, apartments and vacant residential land.
Commercial Property
Property used for business or commercial purposes. Includes offices, retail premises, industrial buildings and mixed-use properties.
Industrial Property
Property used for manufacturing, warehousing, distribution or similar industrial purposes.
Rural Property
Land and improvements used for agricultural, pastoral, horticultural or similar primary production purposes.
Strata Title Property
A form of ownership where individual lots are held under separate titles within a strata scheme. Common in apartments and commercial complexes. Strata valuations consider both the individual lot and the scheme as a whole where relevant.
Leasehold Property
Property held under a lease rather than freehold ownership. In the ACT, most land is held under Crown leasehold. The lease conditions, permitted use and remaining term are relevant to value.
Freehold Property
Property held under an absolute ownership title with no fixed end date. Common in most Australian states. Not the standard tenure in the ACT.
Land, Building and Measurement Concepts
Land Area
The total ground area of a property parcel, typically measured in square metres (m2) or hectares (ha). Land area is a primary unit of comparison in many valuation analyses.
Gross Floor Area (GFA)
The total floor area of a building measured to the outer face of external walls, including all enclosed spaces. Used in commercial and industrial valuations as a primary unit of comparison.
Net Lettable Area (NLA)
The usable floor area of a commercial tenancy, measured to internal walls and excluding common areas, plant rooms and the like. Relevant to rental and investment valuations.
Site Coverage
The proportion of a site occupied by buildings or structures, typically expressed as a percentage. Relevant to planning controls and development potential assessments.
Floor Space Ratio (FSR) / Plot Ratio
The ratio of total floor area to site area, used to regulate building density. A key planning control affecting development potential and residual land value.
Depreciation
A reduction in value of improvements over time due to physical deterioration, functional obsolescence or external factors. Relevant to the cost approach and insurance replacement estimates.
Legal, Title and Planning Terms
Title Search
A search of the land title register to identify the registered owner, encumbrances, easements, covenants and other interests recorded against the property.
Easement
A right held by one party to use part of another party’s land for a specified purpose, such as access or drainage. Easements are noted on title and may affect value.
Covenant
A legally binding obligation registered on title that restricts or requires certain uses or actions in relation to the land. Covenants may affect development potential and value.
Encumbrance
Any registered interest, right or liability affecting a property title, including mortgages, easements, covenants and caveats.
Zoning
A planning classification assigned to land that determines permitted and prohibited uses. Zoning is a primary factor in assessing a property’s use potential and value.
Permitted Use
The uses allowed on a property under the applicable planning instrument and lease conditions. The range and nature of permitted uses can significantly affect market value.
Development Approval (DA)
A formal approval from the relevant planning authority permitting a specified development on a site. The existence or absence of a DA may affect value and marketability.
Market Conditions and Analysis Terms
Market Conditions
The prevailing state of supply, demand, buyer sentiment and pricing activity in a property market at or around the valuation date. Market conditions are assessed through sales evidence, listing volumes and other indicators.
Days on Market
The number of days a property is listed for sale before a contract is exchanged. A useful indicator of demand and market conditions at a given point in time.
Clearance Rate
The proportion of properties offered for sale at auction that are sold. Used as an indicator of market depth and buyer competition.
Yield
The relationship between income and capital value, expressed as a percentage. Gross yield is calculated as annual income divided by sale price. Net yield accounts for outgoings.
Capitalisation Rate (Cap Rate)
The rate of return applied to net income to derive a capital value in the income capitalisation approach. Cap rates reflect market risk and investor expectations at the valuation date.
Median Price
The middle sale price in a ranked series of transactions over a given period. Used as a broad market indicator. The median is not a valuation of any individual property.
Engagement, Instruction and Process Terms
Letter of Instruction
A written document from the client to the valuer setting out the purpose, basis and scope of the valuation required. The instruction defines the engagement and forms part of the scope of work.
Terms of Engagement
The agreed conditions under which a valuation is to be prepared, including fee, timing, purpose, intended users and any limitations or special assumptions.
Intended User
The party or parties identified in the valuation report as those for whom the report is prepared. Reliance is generally limited to intended users unless otherwise specified.
Conflict of Interest
A situation where a valuer’s independence or objectivity may be compromised by a personal, financial or professional interest in the property or parties involved. Valuers are required to disclose and manage conflicts of interest.
Independence
The requirement that a valuer act without bias or undue influence from any party. Independence is a core professional obligation and is particularly important in legal, financial and statutory contexts.
Peer Review
An assessment of a valuation report by another qualified valuer to check methodology, evidence and conclusions. May be requested in litigation, dispute resolution or quality assurance processes.
Related Pages
The following pages on this site provide further context for terms used in this glossary:
- What is Market Value
- The Valuation Process
- Family Law Valuations
- Capital Gains Tax Valuations
- Stamp Duty Valuations
Further Report and Property Terms
Property Interest
The rights or interest being valued, such as a freehold interest, an ACT Crown leasehold interest or an interest subject to an existing lease. The report identifies the interest and relevant assumptions; legal interpretation of title and rights belongs with the appropriate adviser.
Date of Report
The date the valuation report is issued. It may differ from the valuation date and the inspection date. A report issued later does not automatically assess value at its issue date.
Valuation Report
A report communicating a valuer’s opinion for an identified property interest, purpose and valuation date, within a stated scope. Its evidence, assumptions, limitations and permitted reliance should be read together with the value conclusion.
Purpose of Valuation
The reason the valuation is instructed and its intended use. Purpose helps determine the appropriate scope, basis of value, valuation date and intended users; a report for one purpose is not automatically suitable for another.
Basis of Value
The fundamental measurement assumptions on which a reported value is based, such as market value or market rent. The appropriate basis is identified in the instruction and report and must suit the intended purpose.
Highest and Best Use
The use that is physically possible, legally permissible, financially feasible and produces the highest value. It is assessed against the property, permissions, evidence and assumptions at the valuation date; a possible future approval should not be treated as already granted. See highest and best use.
Historical Evidence
Property and market information relevant to an earlier valuation date, such as contemporaneous contracts, photographs, plans and records. The valuer considers its reliability, timing and admissibility under the applicable instruction and professional requirements.
Sale Date
The date associated with a sale, commonly the contract date when comparing transactions. Contract, settlement and publication dates may differ, so the date and source used in the analysis should be identified.
Updated Valuation
A further assessment considered in light of the earlier report, the proposed valuation date, property changes, market evidence and permitted reliance. An update is not an automatic extension of a report’s usefulness and may involve a new instruction or inspection. See valuation updates.
Improvements
Buildings, structures and other works associated with land, considered within the property interest and valuation instruction. Their contribution to market value is not automatically equal to their construction or replacement cost.
Lease
An arrangement granting rights to use or occupy property on stated terms. Rent, term, review provisions, outgoings and other obligations may influence a valuation. A legal adviser should confirm the interpretation and legal effect of the lease.
Crown Lease
A leasehold interest granted by the Crown. For ACT property, the valuer considers the actual Crown lease, its term, purpose clause, conditions and relevant market evidence. Leasehold status alone does not establish a standard value discount. See ACT Crown leasehold and property valuation.
Related Party
A person or entity connected to another party, for example through family, ownership or control. The relevant legal or taxation definition depends on the transaction and legislation. A valuer considers whether the evidence reflects an arm’s length market transaction; the adviser determines the legal or tax treatment.
Prepared by
Tigran Amiyants, Certified Practising Valuer (CPV), Managing Director, Northbourne Valuers.