I received a rates and valuation notice from the council and the valuation of the property is approximately $80,000 less than what I paid for it 6 months ago. This is my first mortgage property and I had previously rented.
Can this valuation be considered normal or have I paid an inflated amount in an inflated market?
The valuation notice from your Council is for the value of the Land only. The amount you paid for the property is for the Land and Building built on it.
When you build a new home on a parcel of land it might cost say $200,000 to build it. Over time the value of the building goes down (if you are renting out the house you can claim depreciation on the building).
It is the land that goes up in value over time, not the building. That is why the exact same house can be worth more in one area than another area - it is due to the land in the more expensive area being higher than the value of the land in the lower area - the house would be worth exactly the same in both areas, but the value of the land would be different.
In your case, your house might only be worth around $80,000 whilst the land is roughly worth as per the Council Valuation.
In Victoria the council rates is based on the Capital Improved Value, not just the Land Value. The Valuation is also calculated at a specific point in time (1st Jan 2018?) of a particular year so may be earlier than when you bought the house. The Council Valuation is also pretty conservative, so no, you probably didn't pay too much at the time although the Value of the property may be less now as the Market was at it's peak when you bought.
Don't worry too much as in the long term I think you will be fine. If it's the property you want to live in or negative gear you will still be ahead in the long run. My only advice is to pay off as much as you can of the mortgage - even though interest rates are low right now.
