Abstract
The Construction industry is one of the largest contributing industries towards socio-economic growth in South Africa. However, With the construction industry being a critical sector in the economic development of South Africa, this study aims to evaluate the adequacy of the current method of valuation used by municipalities for tenement rating in order to reduce the number of objections and increase revenue to the government. This study focuses on three main areas related to the topic of valuation accuracy. Firstly, it examines some of the methodological problems and concerns of attempting to assess the relationship between prior valuations and subsequent transaction prices. Secondly, previous empirical research on this topic is critically examined. Academic critiques of previous empirical research are reviewed. Finally, a sample of property transactions is analysed to assess the accuracy of the previous valuation.
A computer-assisted mass appraisal (CAMA) system is an automated system for maintaining property data, valuing property, notifying owners, and ensuring tax equity through uniform valuations. Such systems were made possible by computers and have grown rapidly in functionality and price performance with improvements in computer hardware and software. CAMA systems were developed on mainframe computers, but now are available on mini-computers and PCs as well. CAMA systems can be designed to operate independently or on a stand-alone basis or can be part of a automated network, with the ability to interact electronically with other departments.
The approach adopted for this research was the quantitative method, while the data were derived from both primary and secondary sources. The secondary data was collected via a detailed review of the literature. The primary data was collected through a questionnaire that was distributed among property valuation experts while the mode of collecting data used was the questionnaire survey. Convenience sampling was used to sample the respondents. Two hundred questionnaires were administered, while one hundred and thirty were returned with one hundred and twenty being useable for the analysis. The following analyses were carried out on the data, namely descriptive analysis was carried which involved graphs, frequency tables and the mean item score. Furthermore, a non-parametric test was carried out to compare the responses of different groups in the dataset.
Findings from the study revealed that the factors affecting the adoption of CAMA systems in the South African valuation industry are as follows: failure to take account of all variables affecting value, risk acceptance, lack of knowledge of international standards and accuracy were ranked the highest. Furthermore, findings measuring the critical success factors for the successful
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implementation of CAMA planning were staff education and training, a clear understanding of municipal goals and sufficient project implementation time. In addition, exploring the benefits of implementing CAMA systems in municipalities revealed that improved transparency of management possibilities, elimination of unnecessary processes and accuracy of property values were deemed important. Lastly, findings from understanding the impact of lodged objections to the current valuation system revealed that conflicts between property owners and the municipality, dissatisfaction of clients and disagreement on values and lastly, wasteful resources in redoing valuations were deemed important. Further analysis was conducted on the data by carrying out a Kruskal Wallis test. The study concluded with a recommendation that for the successful implementation of CAMA systems, the heads of the valuation departments must drive the need for the use of modern CAMA systems in order to raise more revenue for the department. It is also important that they retrain valuers in the industry in the use of CAMA systems which are in line with what is obtainable in the industry worldwide
Keywords: Valuation, CAMA System, Revenue, Property, Accuracy, South Africa.