Land Value vs. Property Value: What Buyers & Investors Must Know

Introduction

When you're browsing listings or looking at property valuations, two figures often stand out: land value and property value. While they may sound similar, these terms mean very different things in Australian real estate. Understanding the distinction is important for buyers, sellers, investors, and homeowners - especially when it comes to taxes, investment potential, and financial planning.

This guide breaks down what land value and property value actually mean, how they’re calculated, and why both matter.

What Is Land Value?

Land value refers to the assessed worth of the land itself, excluding any buildings or improvements.

It’s also known as unimproved value and is determined by the Valuer General in each state or territory. This figure is primarily used for government and legal purposes, including:

• Council rates;

• Land tax; and

• Development planning and zoning assessments.

Factors that influence land value:

• Location and zoning rules;

• Access to transport, schools, and public infrastructure;

• Land size, shape, and topography; and

• Demand and scarcity of similar land parcels.

In Queensland, land value is assessed by the Queensland Valuer-General under the Land Valuation Act 2010 (QLD) and is used to calculate council rates and state land tax. Ensuring the recorded value is accurate helps avoid disputes and unexpected holding costs.

• Why this matters when selling: Accurate valuation inputs (e.g., zoning and land use constraints) support correct disclosures and help avoid buyer disputes during negotiations.

• Practical tip: Review your annual valuation notice and seek advice promptly if the assessment looks out of step with comparable land in your area.

What Is Property Value?

Property value, also called market value or capital improved value, refers to the total value of the land plus all buildings, improvements, and landscaping.

It’s the price a buyer is likely to pay on the open market and is the figure most relevant during:

• Property purchases and sales;

• Mortgage applications; and

• Insurance valuations.

Property value includes:

• Buildings (houses, apartments, commercial structures);

• Fencing, landscaping, and driveways; and

• Renovations or extensions.

Key Differences: Land Value vs. Property Value

Why the Difference Matters

For Buyers: Understanding how much of the price relates to the land helps assess whether you're paying for appreciating or depreciating value. Buildings lose value over time, but land generally gains value.

For Investors: Properties with a higher proportion of land value tend to exhibit better capital growth over time. The land drives long-term appreciation.

For Homeowners: Your council rates and land tax are based on land value, not the market value of your house. This matters when budgeting ongoing costs or planning renovations.

For Tax and Lending: Banks focus on total property value for loans and insurance, while the government relies on land value for taxation. Understanding both gives you a full picture of your financial obligations. Land value may impact capital gains tax when selling.

How Are They Calculated?

Land Value Calculation

• Assessed by comparing recent vacant land sales in the area;

• Factors include location, zoning, development potential, and restrictions; and

• Updated regularly by the Valuer General.

Property Value Calculation

• Market approach: Based on recent comparable sales;

• Cost approach: Land value plus cost to build (minus depreciation); and

• Income approach: For investment properties, based on expected rental return.

Examples

Example 1: A vacant block in inner Brisbane might have a land value of $700,000. Once a home is built, its total property value may reach $1.4 million, depending on the quality of construction and design.

Example 2: Two homes built to the same specification in different suburbs could have vastly different property values simply because the land value varies based on proximity to city centres, school zones, or zoning opportunities.

Seller Disclosure Considerations

From 1 August 2025, Queensland’s Property Law Act 2023 (Qld) requires sellers to provide a completed Form 2 Seller Disclosure Statement (with prescribed certificates) before a buyer signs a contract. While “land value” and “property value” are different concepts, details that influence them must be disclosed correctly.

• Form 2 touches:

  • Title & encumbrances: Easements, covenants, caveats that can affect market value.

  • Planning & zoning: Council or infrastructure notices that shape permitted use and development potential (key drivers of land value).

  • Known material facts: Issues a reasonable buyer would want to know before agreeing on price.

• Why this helps buyers and sellers: Clear, early disclosure aligns expectations, reduces renegotiation risk, and supports smoother finance and insurance assessments tied to property value.

SearchX compiles the required searches and prepares a legally reviewed Form 2, helping agents and sellers stay compliant and confident during negotiations.

Conclusion: Land vs Property Value in Queensland & Disclosure Compliance

Understanding the distinction between land value and property value is crucial when making informed real estate decisions. Land is typically what appreciates over time, while buildings depreciate and require ongoing maintenance.

Whether you're budgeting, applying for finance, or evaluating a property’s long-term potential, review both figures carefully.