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Valuation Practices Survey 2018: It is worth taking note
Valuation Practices Survey 2018
Understanding what an asset is worth, and what drives that value, is essential when management and stakeholders need to make informed, and effective, business and investment decisions. This requires decision makers to trust the valuer’s opinion.
In this report, KPMG presents the key findings of its 2018 Valuation Practices Survey. The 2018 survey provides a short-form summary update of opinions on the current market environment and key valuation assumptions.
We captured the views of 56 professionals from a variety of organisations across Australia, including Australia’s Big 4 accounting firms, leading corporates, investment banks, investment funds, prominent boutique firms, second-tier accounting firms and smaller practitioners.
We believe the results provide insight into current perceptions of value. We hope the survey will help build consistency in valuation practices and enhance trust in the accuracy and independence of the valuation community.
Key findings
- The S&P/ASX200 index is expected to increase rather than decline. More respondents predict that it will increase (34 percent) relative to decreasing (23 percent). One third (34 percent) believing it will remain steady.
- The market is positive about Australian Government bonds, expecting an increase but at a slower rate than recent years. The majority of respondents (62 percent) believe the yield on 10-year Australian government bonds will increase in FY19.
- Most respondents have not changed their risk free rate (60 percent) nor Market Risk Premium (80 percent) for Australia in the last 12 months.
- Current levels of value for most asset classes are perceived to be valued about ‘right’- most respondents believe Resources (63 percent) and Bonds (61 percent) are valued correctly. However, an area of mass concern is Real Estate-an overwhelming majority (89 percent) believe these assets are ‘overvalued’.
- Four in ten (41 percent) respondents expect the incidence of impairment to remain steady while slightly more (45 percent) expect the incidence to increase. Only a small percentage (11 percent) predict that the incidence will decrease.
- The Finance/Insurance/Real Estate, Retail and Construction sectors are expected to face impairment challenges in the upcoming financial year.
We hope this report will help build consistency in valuation practices and enhance trust in the accuracy and independence of the valuation community.
© 2020 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. Liability limited by a scheme approved under Professional Standards Legislation.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.
