Craig Binnie

June 05, 2008 12:00am

HOME owners are about to be hit with huge rate hikes after councils upped their valuations on some homes by more than 50 per cent.

Ratepayers in the best-performing areas will be forced to pay hundreds of dollars more when rates notices are sent out next month.

Council figures show home owners in some suburbs could face large increases while neighbouring areas can expect rate cuts.

Northcote and Alphington homeowners will see their home values marked up 37 per cent -- compared with the municipality average of 26.4 per cent. Nearby Bundoora (15.9 per cent), Coburg (18.9 per cent) and Reservoir (19.7 per cent) received below-average revaluations and could see lower rates.

The 42 Victorian councils that have revealed their 2008-09 draft budgets want to put up rates by an average of 5.5 per cent.

Properties that rise in value by more than the municipality's average will have to pay the average increase, plus extra to make up for the increased value of their property.

Though some home owners pay higher rates, they do not receive extra services.

Golden Plains Shire Council, between Ballarat and Geelong, has proposed the state's highest increase (9.95 per cent) followed by Benalla Rural City Council (8.6 per cent). Knox City Council has proposed the highest metropolitan increase so far (6.42 per cent).

Gannawarra Shire, in the state's north, has proposed the lowest rise (1.2 per cent) followed by Port Phillip (2.9 per cent).

Manningham mayor Geoff Gough said rising property prices did not automatically mean that home owners would pay more in rates.

Councils generally calculate their rates by dividing the total value of all properties in their municipality by the amount they want to collect.

This figure is then multiplied by the valuation of each property to work out the share of the rates each property should pay.

The Municipal Association of Victoria has said councils were being forced to increase rates by more than the inflation rate to cover the increased costs of current services and capital works programs.

The statewide revaluation shows some suburbs have prospered more than others in the property boom.

In the City of Port Phillip, property prices rose 36.78 per cent on average.

But the best-performing suburbs were Middle Park (up 52.04 per cent) and Albert Park (up 49.73 per cent).

On the Bass Coast, valuations were up 11.62 per cent compared with an average increase of 6.82 per cent in 2006 and 80.91 per cent in 2004.

The largest increases were in rural, commercial, industrial and prestigious coastal residential properties.

In Darebin, the average property rose 26.4 per cent in value; the largest increases were in Alphington, Northcote and Fairfield.

In Greater Bendigo, the average residential property's value increased 4.6 per cent, but rural residential properties did better than those in urban Bendigo.

The revaluation and rate rises may be the final straw for some homeowners already battling higher interest rates and living costs.

Victorian Council of Social Service spokesman David Imber said many asset-rich but cash-poor aged pensioners were going to find it difficult to pay their rates.

But he said most councils allowed aged pensioners to defer paying their rates until their property was sold.

The State Government offers a pensioner rate rebate of $178.60, and some councils offer additional rebates.

Homeowners who disagree with their property's valuation can lodge an objection with their council.