Standard value

Standard Property Value - The standard property value is a calculation parameter used in the property value method of real estate appraisal that determines the building’s value based on standardized construction costs (standard construction costs, NHK). It serves as the base value from which depreciation due to age, construction defects, and other factors affecting value are deducted to determine the final property value. The standard property value represents the new construction replacement value of a comparable building.

Calculation

The standard property value is calculated as: Gross floor area (GFA) × Standard construction costs (NHK) per m² GFA. The standard construction costs are tabulated in the appendix to the ImmoWertV (Real Property Value Guideline) by building type, finish standard, and year of construction class. For a single-family home with a medium finish standard, the standard construction costs currently range from approximately 1,600-2,000 euros/m² GFA (after adjustment to the 2024 construction price index).

The age-related depreciation (linear or market-adjusted) is then deducted from the standard property value, and the land value is added to obtain the total property value. The remaining useful life of the building is decisive here: It is calculated as the total useful life (typically 60-80 years for residential buildings) minus the age of the building, but can be extended through modernizations.

Calculation Example

A single-family home with a gross floor area of 180 m², built in 1990, with an average standard of finish: NHK 2024 approx. €1,800/m². Standard property value: 180 × 1,800 = €324,000. Total useful life 70 years, age 34 years → remaining useful life 36 years, age-related depreciation approx. 49% → minus €157,800 = building property value €166,200. Adding the land value (e.g., 100 m² × €600/m² = €60,000) results in a preliminary asset value of €226,200, which is extrapolated to the market value using the market adjustment factor.

Role in the asset value method

The cost approach is primarily used for owner-occupied residential properties (single-family homes, semi-detached homes) where insufficient rental data is available for the income approach. The standard cost value is the theoretical new construction price, which is adjusted to the actual market situation using market adjustment factors established by the Appraisal Committee. Without market adjustments, the asset value would often be too low in sought-after locations and too high in weaker locations.

In the Nuremberg metropolitan region, the Appraisal Committee regularly publishes asset value factors for various locations and building types. These factors are an important tool for bringing the determined standard asset value in line with the actual market price level.

Renovations and Their Impact on Standard Real Value

Renovations increase the standard real value in two ways: First, they can improve the finish class (e.g., from “medium” to “upscale”), which leads to a higher NHK valuation. Second, extensive renovations extend the building’s remaining useful life, thereby reducing age-related depreciation. A property from the 1960s that has undergone a complete core renovation can be considered equivalent to a newer property by an appraiser if all major components have been replaced.

Practical Tip for Owners in Nuremberg

We recommend that owners in the Nuremberg metropolitan region who wish to estimate the value of their owner-occupied home use the cost approach as one of several tools. The market adjustment factor of the Nuremberg Appraisal Committee is crucial: it adjusts the standard property value to the actual price level.

In sought-after locations such as Erlenstegen or Schmausenbuck, the market adjustment factor is often well above 1.0-the house is worth more on the market than its pure construction costs. In less desirable locations, it can be below 1.0. For sales, we recommend always supplementing the cost approach with a comparative market analysis to obtain a complete picture.

Frequently Asked Questions

Why does the standard cost value often differ from the purchase price?

The standard cost value reflects the construction costs of a comparable new building, not the market value. In sought-after locations, buyers pay significantly more than the construction costs (location value); in less sought-after locations, they pay less. The market adjustment factor established by the Appraisal Committee compensates for this difference. In highly sought-after locations in Nuremberg, the purchase price can exceed the standard market value by 30-60%.

Are modernizations taken into account in the standard market value?

Modernizations are factored into the calculation through an extension of the remaining useful life and, if applicable, a higher equipment category. A comprehensively modernized property has a longer remaining useful life and thus a lower depreciation due to age-this increases the asset value. The type and scope of the modernization are documented and evaluated in the appraisal report.

Can I calculate the standard property value myself?

In principle, yes-the NHK tables and calculation methodology are publicly available (ImmoWertV, Property Value Guideline). This is sufficient for a rough estimate. However, for a reliable valuation (sale, financing, taxes), a professional appraiser should be commissioned, as the correct classification into equipment categories, the selection of the market adjustment factor, and the valuation of modernizations require expert knowledge.

Normal Market Value in a Tax Context

In addition to real estate sales, normal market value plays an important role in the tax valuation of real estate. For inheritance and gift taxes, the tax office uses its own valuation methods based on the Real Estate Valuation Ordinance (ImmoWertV), which are methodologically similar to the cost approach. The difference: For tax purposes, the valuation parameters may differ from the values actually observed in the market.

Owners who wish to transfer a property through inheritance or a gift should verify whether the value determined by the tax office corresponds to the actual market value. If the tax-assessed value is too high, it can be challenged through a counter-appraisal by a publicly appointed expert-which can significantly reduce the inheritance or gift tax.

Interplay of the Cost Approach and Income Approach

In professional real estate valuation, the standard cost value is rarely considered in isolation. Appraisers regularly combine multiple methods to arrive at a reliable market value:

• Cost Approach (Basis: Standard Cost Value): Suitable for owner-occupied homes where no reliable rental data is available.
• Income approach: Suitable for rental properties, multi-family homes, and commercial real estate where income is the primary factor in the purchase decision.
• Comparable sales approach: Suitable for land parcels and condominiums for which sufficient comparable prices are available from the real estate market report.

In addition to asset value factors, the Nuremberg Appraisal Committee publishes property interest rates and comparable prices in the real estate market report, which provide important input variables for all three methods. This report is published annually and is one of the most important sources of information on the regional real estate market for owners, buyers, and investors.

Standard Asset Value and Bank Lending Value

Banks also use methods similar to the cost approach in real estate financing. The lending value-the value used to determine the maximum loan amount-must be calculated in a sustainable and conservative manner according to the Lending Value Determination Ordinance (BelWertV). Both the cost approach and the income approach are factored into the calculation.

In practice, this means: The mortgage lending value is generally lower than the current market value-the bank thus builds in a safety buffer against market value fluctuations. Anyone buying a property in Nuremberg should be aware that the bank does not necessarily lend the full purchase price, but rather the internal mortgage lending value. If the purchase price is significantly higher than the mortgage lending value (e.g., in particularly sought-after locations), this may result in the need to contribute more equity than originally planned.

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