Metro valuation system is ‘old hat’

Residential properties in the City of Cape Town will be valued for the current general valuation (GV) of houses in the Cape Metropole, by Americans, using a sophisticated computerised multivariate valuation technique known as CAMA (computer-assisted mass appraisal). However, says Erwin Rode of Rode & Associates, the technique itself is old hat and should have been used in South Africa more than a decade ago.

As far back as 1988 Rode researched, independently, the practicality of using multiple regression as a technique to mass-value residential properties in Bellville. Rode built a successful model that explained 95% of the variations in residential prices. The most important predictor variables were:

Interestingly enough, swimming pools added no value to a house. Comparable houses in coloured neighbourhoods (in terms of the Group Areas Act) were on average 17% more expensive than in white neighbourhoods. This premium would have disappeared after the repeal of the Group Areas Act, resulting in heavy losses to coloured homeowners.

Rode says it was inevitable that some old-timer valuers would resist the introduction of CAMA, but its eventual application to GVs was inevitable. The advantages were higher accuracy, greater speed and lower costs. An important caveat was that the model builders should provide homeowners with the technical details of the equations so that they or their advisers could decide whether the calculated values were fair.