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Property value refers to the amount assigned to a property at a given date, using a specified method and for a defined purpose. This generic term does not denote a single banking value: its meaning depends on the intended use of the valuation.
Property valuation: definition of the factors assessed
A property valuation does not simply apply an average price per square metre. The valuer distinguishes between the wider and immediate location, the property’s physical characteristics, its state of repair, the rights attached to the plot and the building’s use. The method then depends on the type of property: statistical comparison for a standard home, a replacement-cost approach for an unusual property or capitalised income for a rental investment property.
Property values: a useful definition for your financing
In a mortgage application, a property value is meaningful only when you know its valuation date, purpose and calculation method. An undocumented renovation, an easement, a building right, a restriction on use or a lack of comparable properties may affect the result. Two different valuations are not therefore necessarily contradictory: they may be based on different data or assumptions.
Not to be confused with
- the market value
- the mortgage lending value
- the property fair value
