The Property Institute of New Zealand is warning Auckland home owners against taking too much notice of the new council valuations due out next month, saying that such valuations are a "blunt instrument" and will be a "guesstimate" rather than an accurate indicator of what homes are actually worth.
The institute's chief executive, Ashley Church, said there was a common misunderstanding about what a Council Valuation was and how much weight should be placed on it.
Councils throughout New Zealand are required to update Council Valuations (CVs) on residential, commercial, industrial and rural land once every three years in order to set rates.
The latest Auckland figures are due next month and are expected to reflect a big increase in values based on the strength of the Auckland market over the past few years.
"CVs are conducted once every three years and they’re a ‘snapshot’ of the approximate value of any given property at that moment in time," Church said.
"They shouldn’t be regarded as an exact measure of the value of a home – and they’re certainly not intended to provide an ongoing price guide."
Church said the methodology for a Council Valuation was very different to a formal valuation.
"A CV is a blunt instrument. It’s a computer based assessment of the value of your home based on what other homes in your area have sold for – whereas a formal Registered Valuation is conducted onsite and takes account of the condition of your home, any renovations you might have made, whether you have a pool, the number of bedrooms you might have, the condition of your home – all of the things that make it unique.
"There’s no comparison between the two."
Church acknowledged that, for many people, the Council valuation of their home was matter of curiosity and academic interest – but said CVs shouldn’t be regarded as a replacement for a formal valuation.
"If you’re selling your home or wanting to use the equity in it to borrow money it’s important that you get your property valued formally. This will put you in a stronger bargaining position if you want to sell – and any increase in value could give you more clout with the bank if you want to borrow money to make a purchase or buy a business."
And Church said that the question of the value of your home had also been further confused by the recent proliferation of ‘free’ online home valuation services.
"There are a couple of paid services that are getting much better at remote assessment – but the free ones are generally about as effective as reading tealeaves or chicken entrails and their advice should be treated with a grain of salt."
39 Comments
They’ll be very worried going to high to get flooded with people trying to get them changed before they reset in 3 years, I wouldn’t worry about it myself but there 2 types of people. 1 that likes high CVs thinking it means something and the other type that doesn’t but is trying to save money on the rates bill. Council have a problem alright because they could also scare people if to low
At least a further 10% drop predicted folks.
https://www.stuff.co.nz/business/98203429/new-governments-policies-coul…
From the Barfoot & Thompson auctions on the North Shore this afternoon, the first 8 houses put up for sale were all passed in and the only property that attracted bids (and was later passed in) was an empty section. Prices coming off 10% in 3 years? 3 months seems more likely.
OK, final report from Barfoot's North Shore auction this afternoon - 13 properties offered for sale, and only 1 sold. The property that did sell was at Northcote Point (a premium North Shore suburb and the closest suburb on the Shore to the CBD) which reinforces what a number of people have been saying - quality properties in good suburbs are selling, but for all others it's going to be hard going. 1 sale out of 13 is what, about an 8% success rate?
And even that one will have a hard time soon as other prices get lower . People don’t normally mind paying a bit of a premium for a nicer property but only if realistic, it’s like epsom ,greenlane and royal oak. All great areas but they would never drift that far apart because if they did people would in the end find the cheapest .
Oh you poor thing
Aspiring to live where ?
what exactly is great again ?
Living close to your office building in what calls itself a city yet has not mass rapid transit system & has only just completed a tunnel that was planned decades ago !
No the DGZ was really only useful for kiddies education until it became swamped with foreigners filling the seats in school
Back in 79 we built 10 townhouses there & sold all before completion for 75K each Could’ve kept a couple but honestly its got no beaches and views are of other houses
One could read thru the vested lines. Nearing that time, where a single website will display all data related to any property, where information is no longer blanketed and routinely withheld and the pretense of the real estate industry is overhauled and moved into the 21st century.
CV is just a measure for local body taxation. In its current form it is a rich tax as more expensive houses pay a lot more, vs UK poll tax model which is head count based and more reflective of council services consumption.
If your property can be intensified in the new plan expect a significant hike, especially if you are now multi story zoned.
Always a poor indicator of real value. Agents to use it as a benchmark, averaged percentage difference to CV.
If the property can now be intensified under the unitary plan its rates bill will jump ahead of what it would have been.
So, the owner can now either pay the extra rates or the owner could try to sell it at the elevated valuation. But there will not be enough developers who have the finance or contractors to actually develop it.
Or they can get a loan and attempt to develop it themselves.
However there will the thousands upon thousands of cases where nothing will change for a variety of reasons and the owner will just have to find more rates money from somewhere.
Actually, in a falling market, those owners may not actually get a valuation increase, it will be the owners of properties which cannot be developed will experience a loss. The owners of development properties will however still have to cough up the increased rates.
I commented about this about a month ago, pointing out that the basis of the valuation was seriously flawed if rates were to be calculated on the deemed sale value of a property at the height of the biggest property bubble Auckland has ever seen .
It need to be resolved and Auckland council need to review their methodology or face a tsunami of challenges to values
Unfortunately, there's a shortage of chicken entrails at the minute, because of the over-consumption occasioned by pundits' attempts to divine the Wizened One's choices in the interregnum. Normal service will be resumed once talks with the Diminutive Hens Decapitation Union have concluded successfully - they are holding out for the minimum wage of $20/hour to be applied now, and have held hostage a coopfull of leathery old Roosters to emphasize their point.
Without assassinating character, Ashley Church has an overweight belief in "the force" (the property industry) to know what represents reality. He's little more than a propagandist whose key roles are to influence the perception of the public as to the value of his paymasters.
Why? CV means 'nothing'. Who would want to have a depreciating asset AND pay more Council Rates on it that could be otherwise? Just because other properties have sold '10% Below CV" doesn't mean a thing about 'what yours will sell for'! It's the realised price that matters, not how much below an artificial construct that is....
Basing rates on the CV is just a wealth tax, as it bears no relation to the services being used. It should be on land value, or per person living in the household, as it should be for covering the cost of services.
Also I disagree with much in the article, especially over the accuracy, as it should be about right,exclyuding chattels and is seen as the estimated market value of the property at the time it is conducted. Even the QV website says this
A rating valuation is based on the likely selling price (market value) of a property (excluding chattels) at a particular point in time (the effective date) of your local council's last general rating property valuation.
If peoples CV doesn't t look right, then they can dispute it, and they will then get someone out who will do a proper valuation. That should then be correct. Look what happened in Christchurch where people only got paid out their CV, so you want to make sure it is 100% correct. Also it should be quoted as the RV, not CV. The term CV hasn't been used for years.
One thing to note is that it does include chattels, so the RV is going to be slightly less than a sale price, which will usually include chattels.
Rob, excellent comment.
A rating valuation is based on the likely selling price (market value) of a property (excluding chattels) at a particular point in time...
Indeed, I also disagree with a lot in this article. Obviously without checking every property meticulously there are going to be a few anomalies. However it should be generally an about right, within the ballpark, figure. It certainly should be close when you average all the properties out. I'm sure they don't just pluck a figure out of thin air.
This is why I use my comparison of RV to sale price with as many recent sales as possible. It has proven to be a remarkably accurate gauge of property price direction. It was remarkable to me because I generally expected the figures to fluctuate wildly due to inaccuracy of the RVs but they didn't.
Sure they would be inaccurate if a large number of sales were distressed leaky homes or if there were a number of odd high value land banking type properties. I generally would look out for those and filter them out.
The RV values are important and when it comes to selling it is better to have a high one rather than a low one. When it comes to buying a high RV is important as well as the bank will use the RV as a baseline of the property's value. They probably also use my calculation of "so much % above RV as current value for the area too, before looking at other factors. I've never had to get a a proper valuation so they must be using council RV in some sense and relying on it being "on average" about right. They also trust REA evaluations too.
I just picked a random house on trademe around the 1million mark for a look and they all would be similar. 2014 CV $700k , sold early this year $1.2 million and trademe middle estimates today $1050000. I think the council should low ball the CVs . How would it look if 3 CVs in a row went . In the case of this house. 2014 $700k , 2017 $1million , 2020 $800k. Not a good look at all. I think this is what they are thinking about
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