Johannesburg February 28th, 2007 - Municipalities across the country will soon be able to access equitable, market-based valuations using automated valuation model (AVM) technology recently brought to market by a Johannesburg-based risk management company. 

Thato Mojapelo, the head of municipal valuations at Lightstone, says several large municipalities have expressed interest in using Lightstone’s AVM technology in the development of their valuation rolls. 

Lightstone’s system has two major advantages: first, it allows municipal valuers to quickly develop a draft roll for policy setting and modelling purposes; and second, it provides instant, reliable valuations that can be used as part of each municipalities overall valuation approach.

“The timing and availability of the tool is ideal,” said Mojapelo. “Using an AVM, municipalities can quickly and objectively revalue entire areas at a fraction of the expense and time taken to physically value each property.  The tool is particularly effective when used in conjunction with a traditional valuation, as the ‘right tool is used for the right job’” 

Lightstone’s system uses the most recent residential property price data available and combines several statistically robust valuation approaches for each property. The company obtains data from a variety of sources, including the Deeds Office and the Surveyor General, and this is augmented by data from secondary sources, such as banks and physical property assessors.

In line with South Africa’s new Property Rates Act, all municipalities must have new valuation rolls in place by 2009 at the latest.  However, Mojapelo says that most municipalities are under pressure to get their new rolls finalized before then, as the new valuation approach will lead to rates costs being shared more equitably by residents.  The pressure is particularly high in larger metros, where large numbers of people are affected and the political ramifications of getting things wrong will be severe. 

“Most developed cities in the world use technology such as this to value their residential property portfolios,” said Mojapelo. “The most important benefit of AVM technology is that it is objective by definition, and treats all property owners equitably.  

The system is not appropriate for all properties, but we have a reliable confidence score with each valuation that enables us to determine when a traditional physical valuation is required. We also have a relationship with a leading valuer – who has bought into our technology – and this allows us to deliver a complete solution to our clients.”

The AVM methodology used by Lightstone is well established in the United Kingdom and the United States.  The key to its success lies in rigorous home price analysis that uses current residential property information - such as demographics, property characteristics, sales prices, and price trends - to calculate a value for each specific property. These value calculations are based on statistical combinations of non-linear regression, comparable sales modelling and repeat sales modelling.

The Property Rates Act makes provision for the use of ‘comparative, analytical and other systems or techniques, including aerial photography and computer-assisted mass appraisal systems or techniques, taking into account changes in technology and valuation systems and techniques’.

Lightstone’s AVM technology thus squarely complies with the Act and represents a low cost, reliable opportunity for Municipal Managers to expedite the development of their valuation rolls.  In addition, Lightstone works in tandem with registered valuers to make sure that the final roll is equitable and logical.

“We’re already working with a number of big banks and are finalizing arrangements with one of the large metros.  Banks are by nature risk averse and the fact that we have met their stringent requirements demonstrates the reliability of our technology.”

Issued on behalf of:

Lightstone Risk Management

Client contact: Thato Mojapelo
Tel. No.:011 244-8405
Email address: This email address is being protected from spambots. You need JavaScript enabled to view it.