Valuing a large and diverse Housing Portfolio using Mass Appraisal Methods

It is increasingly the case that Public Housing Authorities are required to account for the financial performance and condition of their property portfolio on a regular basis. This is certainly the case in Australia where property and housing are largely the responsibility of State Governments rather than the Federal Government. In terms of asset values and performance, these are required annually, in market terms – not a nominal replacement value based on costs. This paper will discuss the valuation of the Teacher Housing Authority, which manages a portfolio of 1,400 properties to provide accommodation for school teachers in mainly remote areas of Western NSW. This is a very diverse portfolio consisting of both houses and units (apartments); with many properties (up to 50) in a small number of rural centres; but is also quite sparse in some areas further removed from these regional towns. Mass appraisal methods are used to value the portfolio using a nearest-neighbour approach based on location, property type and property characteristics. The model and its development and use will be discussed. The selection of benchmark properties (which are directly valued) will be an issue of focus in terms of the optimal distribution and number of benchmarks required to meet quality assurance targets.