People in poorer Auckland suburbs likely to face bigger rates increases than those in wealthier ones

Property

Auckland Council's rating valuations have tended to rise the most in the cheaper parts of town, which will probably also face the heftiest rates increases

20th Nov 17, 10:15am by Greg Ninness

Auckland Council's rating valuations have increased by 50% or more in almost of third of the city's suburbs and districts since the last revaluations took place three years ago.

The average increase across the entire region was 46% and of the 237 suburbs and districts, 74 (31%) recorded rises of 50% or more.

The biggest increase of 151% was in Paerata/Runciman on the region's southern flanks, followed by Wainui/Waitoki (+102%) north of Kaukapaka in rural Rodney.

Other areas to record very high revaluations gains were Drury (+81%), Karaka/Kingseat (+73%), Rosehill near Papakura (+73%), Surfdale on on Waiheke Island (+71%), and Westgate (+86%) and Whenuapai (+74%).

A notable feature of the latest revaluations is that values in areas that have traditionally been considered the most affordable housing areas have generally risen at a much greater pace than the more expensive areas.

Cheaper housing areas include Otara (+64%), Otahuhu (+58%), and Massey (+55%), which have recorded value rises greater than the regional average of 46%.

But areas such as Epsom (+39%), Grey Lynn (+40%), Herne Bay (+42%), and Remuera (+42%) have posted value increases below the national average.

The greater growth of values in the more affordable areas is probably the result of speculative investor activity driving up prices, as investors chased capital gains ahead of rental income growth over the last few years, whereas buyers in more affluent suburbs are more likely to be owner-occupiers.

Unfortunately that also means that in percentage terms, rates increases are likely to be greatest in the cheaper parts of town, where people tend to have lower incomes, and lower in the higher priced suburbs where incomes tend to be higher.

Here's the full list of indicative value changes by suburb/district:

The latest rating valuations for individual properties are available on Auckland Council's website:

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67 Comments

by Uninterested | 20th Nov 17, 10:28am 1511126906

Sure rates increases (as a percentage) are higher in the southern low priced areas. With the uniform annual general component being set low by the left leaning council in Ak, and the variable component set relatively high, this valuation increase in low priced areas does have a higher impact than what the left would want.
However the absolute value of rates paid will still be significantly less than those paid in the higher priced suburbs.

by NorthernLights | 20th Nov 17, 1:35pm 1511138159

As long as simpletons play the partisan left or right argument there will be continuing division
The Auckland rating system is laughable when poorer suburbs cop a heavier rate increase because spruikers residing in Epsom & Remmers speculate in poorer suburb RE

by Averageman | 20th Nov 17, 2:38pm 1511141887

Agreed. Specuvestors pumping house prices has driven poorer areas thru the roof. International specuvestors pumping the no so poor areas have achieved the same.

by Boatman | 20th Nov 17, 10:30am 1511127041

So the ideal of Auckland becoming the worlds most livable city could become true but only for the very wealthy

by Penguin | 20th Nov 17, 11:43am 1511131418

Isn't that normal market forces playing out? People pay a premium for quality.

by Didge | 20th Nov 17, 10:31am 1511127094

Perhaps lower priced Auckland suburbs may now get better maintenance and facilities.

by Uninterested | 20th Nov 17, 10:51am 1511128319

No the rail tunnel project replaces everything like that all over Auckland.
The Chinese seem to have had a rethink on expenditure such as this.

by JimboJones | 20th Nov 17, 11:52am 1511131973

"The Chinese seem to have had a rethink on expenditure such as this"
Really? Are they moving to the NZ 'roads only' model? Cities with 20 million people plus and no trains? I think you're dreaming...

by tothepoint - d… | 20th Nov 17, 12:46pm 1511135215

You could be correct, Didge, but such suburbs usually have higher commuting expenses??

TTP

by Penguin | 20th Nov 17, 11:18am 1511129936

I think my new CV is around 10% higher than the current market price.

by Double-GZ | 20th Nov 17, 11:21am 1511130108

OMG one of my neighbour's land value has increased from $3.6M to $5.2M. I wonder if they will object???

by NorthernLights | 20th Nov 17, 2:01pm 1511139691

Who knows one day you might actually have all your mortgages paid off DubleDZ
Keep working hard
Let me tell you nobody here talks about their neighbours real estate values like you do unless from New Jersey Ha!
One day you’ll develop & learn trying to impress the way you do is utter crassness

by Groen_mamba | 20th Nov 17, 11:30am 1511130604

6,528 Buyers in Auckland this year so far have paid too much for their houses already!!!

"Goodall said the latest valuation figures showed there were slightly more Aucklanders in the winning category. Of the 14,795 property sales he analysed this year, with just over, 7,589 half buying for less than their new RV.
Goodall said "interestingly" 678 properties sold for bang on their new RV."
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=119…

by gooki | 20th Nov 17, 1:50pm 1511139057

RV = rateable value, not market value. There's a big difference.

by Double-GZ | 20th Nov 17, 11:41am 1511131277

So glad that both Epsom and Remuera made the list!!
Most expensive Auckland streets based on median RV
Cremorne St, Herne Bay $6.3m across 14 properties
Stack St, Herne Bay $5.6m across seven properties
Westbury Cres, Remuera $5.35m across 12 properties
Omana Ave, Epsom $4.9m across 20 properties
Judge St, Parnell, $4.8m across 11 properties
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11945800

by JimboJones | 20th Nov 17, 11:57am 1511132223

Aren't we all...
Was Bernard's Epsom pad on one of those?

by CJ099 | 20th Nov 17, 1:56pm 1511139383

Going to be an interesting challenge to see if those properties can in anyway maintain those prices come this time next year.

by Retired-Poppy | 20th Nov 17, 7:06pm 1511157995

CJ099, it never rains on leafy suburbs! One day some of these dreamers will awake to a thumping surprise, the bank was actually the Landlord all along and all they are left with is leaves.

by RickStrauss | 20th Nov 17, 12:29pm 1511134166

No coincidence that a lot of those areas that have seen the biggest increases have also seen a lot of building. Perhaps a lot of what was rated in some of those areas in the past was undeveloped land.

by Cowpat | 20th Nov 17, 12:40pm 1511134826

As a kid,and not that long ago ,I remember rateable valuations usually required only 5 digits

by tothepoint - d… | 20th Nov 17, 12:50pm 1511135422

Hi Cowpat,

I expect most Auckland properties will reach 8 digits in my lifetime.......

Will have to save hard!

TTP

by Cowpat | 20th Nov 17, 1:59pm 1511139566

Good afternoon Toothypoint. Are you suggesting that we may become somewhat Zimbabwean .

by tothepoint - d… | 20th Nov 17, 2:09pm 1511140195

Dearest Cowpat,

Not at all!

Just trying to indicate to you how young I am........ (-;

TTP

by Retired-Poppy | 20th Nov 17, 2:21pm 1511140868

TTP, were you around during the 2008 GFC? If not, then it helps explains a lot.

by tothepoint - d… | 20th Nov 17, 3:18pm 1511144329

Hi R-P,

Was I around during the 2008 GFC?

Certainly was.

In fact, some of my colleagues claim I caused It.

TTP

by J.C. | 20th Nov 17, 2:21pm 1511140880

I expect most Auckland properties will reach 8 digits in my lifetime.....

Would you like to explain that with a rationale? Or was it just a off-the-top-of-head attempt at a troll?

by tothepoint - d… | 20th Nov 17, 3:21pm 1511144460

Hi J.C.,

As before, it's merely to provide people with an indication of how young I am.

TTP

by J.C. | 20th Nov 17, 3:33pm 1511145186

Yes, it's a troll looking for a reaction.

by Retired-Poppy | 20th Nov 17, 3:36pm 1511145400

TTP, I expect most Auckland properties will reach 8 digits in my lifetime.....I also want to know how you explain the rationale. Is it derived from the same fortune cookie packet as, Auckland prices will oscillate in the foreseeable future and Auckland prices will take off again in the later part of 2018? Please, no more waffle and just answer the question!

by tothepoint - d… | 20th Nov 17, 4:26pm 1511148381

Hi R-P,

Following every significant property market upswing in the last 70 years in NZ, there have been those who have come forward saying that (average) prices have become unsustainable and predicted that a "crash" will occur........ But no "crash" has ever eventuated. Historically, prices have tended to level off (fluctuating a little) and eventually moved up again.

This sort of scenario is highly likely to be repeated (even though most contributors here dispute that).

Yes - it's still possible that prices will head north again at some point in 2018. But, I now think it's more likely they'll oscillate around their current level for the foreseeable future - which is what I've been saying since the formation of the new Government.

Please note that I have never said, simultaneously, that prices will oscillate and that they will take off again in the latter part of 2018. (That would be somewhat contradictory.) Note that I never used the term "oscillate" before the formation of the new Government.

Like anybody else, I'm entitled to revise my views as updated information/data becomes available - and have done so over the last few weeks. The policies of the new Government have led me to believe that property prices will more likely oscillate in 2018 - rather then move upward to any significant degree.

That is my current position and I hope you are now clear on that.

TTP

by Didge | 20th Nov 17, 4:41pm 1511149315

Dreams are free!

by Retired-Poppy | 20th Nov 17, 4:46pm 1511149576

Hi TTP, to coincide with this biggest market upswing in 70 years the world has been subjected to the lowest interest rates in history. What do you think the market will do as QE is withdrawn? Being that interest rates are still low, how effective are these old tools in preventing repeat GFC?
Right now, Is China in a position of strength like it was in 2008 to prevent a sudden collapse of its many bubbles and lastly, is China going to be our White Knight or our Black Swan next time?

I say, FHB, wait there is no hurry. If you're highly leveraged get out of debt fast. Looking forward, I feel the risks are mounting quite quickly and quite unnerving to be honest.

by tothepoint - d… | 20th Nov 17, 5:14pm 1511151289

Hi R-P,

I wouldn't be advising anyone to hold back from buying their own home - including FHBs.

If you wait, wait, wait and prices creep up then you only end up being further behind. I know that sounds simple and obvious - but it can easily happen if you're too passive. People need to understand that.

Taking on a mortgage when you're young, qualified and have career prospects is absolutely commonsense, in my view. Things can become much tougher as one ages....... the sooner you get established/secure the easier life can be.

People need to understand that - otherwise one can be destined to a life of paying rent (and the insecurity of renting and being at the whim of landladies etc). I doubt that's what most NZers want.

How many people regret buying their own home 5,10, 20, 40 or 60 years ago? Chances are it won't be any different in another 5, 10, 20, 40 or 60 years time.

TTP

by Retired-Poppy | 20th Nov 17, 5:44pm 1511153048

TTP, are you saying the future will be the same as the past? I'm confident In Ireland, USA and Spain the same was said in the Cafes in 2006. Its when the majority of the population are least prepared - it happens big. No one likes these sorts of surprises and it wrecks families. It's the Property Spruikers and commission takers that don't consider the grief debt stress causes families. If FHB get this wrong it's a rude awakening to find that your Bank is really your Landlord. FHB, there is no hurry, wait for the distressed sales.

by TainuiBabe | 20th Nov 17, 6:19pm 1511155152

I don't think FHB's have a choice but to wait. Foreign investors are in the process of being banned and the banks are facing funding issues and in particular, one bank named Westpac has been given 18 months by the RBNZ to raise its capital to meet requirements by order! As Westpac is a major landlord in the housing loan portfolio, I am wondering how many other banks might need to re-value their portfolio's and request higher repayments from their customers. It is a bit frightening really.

by tothepoint - d… | 20th Nov 17, 8:39pm 1511163561

I'm very weary of people like you who think what happens overseas (e.g. Ireland, USA, Spain) is going to happen in NZ.

American-fried Kentucky theory need not necessarily work in NZ. You need to grasp that.

TTP

by JimboJones | 20th Nov 17, 12:59pm 1511135950

"The greater growth of values in the more affordable areas is probably the result of speculative investor activity driving up prices" - a bit of an assumption isn't it? A large part would be first home buyers on good incomes that can no longer afford the former Auckland City Council area and have to buy their first house further out (or indeed the speculation that this is the case).

by gooki | 20th Nov 17, 1:53pm 1511139186

When investors outnumbered first home buyers by a ratio of 8:1 over the past decade in Auckland, I think it's a fair call to say:

"The greater growth of values in the more affordable areas is probably the result of speculative investor activity driving up prices"

by SmoKey | 20th Nov 17, 1:24pm 1511137461

From the 3/4 addresses I checked, I notice that the value of the land has been incredibly increased while the building value has been ridiculously lowered, especially in case of old buildings. Land tax in disguise, any one ?

by Yvil | 20th Nov 17, 1:40pm 1511138434

Of course, it's the land value that goes up, not the improvements. Buildings devalue, it's the land that appreciates

by Penguin | 20th Nov 17, 2:07pm 1511140029

Most people in Auckland tend to forget they need to spend money on maintaining their property! A lot of investment properties need a serious amount of work doing to them.

by gingerninja | 20th Nov 17, 2:21pm 1511140906

Penguin, This is the thing that makes me scratch my head. Some commentators talk about a rental property which starts out negatively yielded and taking over a decade, nearly 2 decades to start paying a good yield. And I always think.... but what about rates and maintenance?

I am an accidental landlord, in the sense that we rent out a house in the UK that we used to live in. For various reasons, the money was better left in the house, than cashing up at the time we moved to NZ. But, even though, technically the house gives nearly an 8% yield, any income than I get above what covers the mortgage, letting fees, regular maintenance costs etc, goes into a kitty to cover the inevitable bigger spend maintenance issues that will undoubtedly occur.
When people talk about long term letting from a property that started out heavily negatively geared, they never mention what I would consider reasonable maintenance costs. And that now makes sense to me, having looked at properties that get offered for rent, and what a terrible condition so many of them are in.

by Retired-Poppy | 20th Nov 17, 2:38pm 1511141929

gingerninja, reflecting the real risks and costs associated with owning and renting out houses, I'm also wide eyed as to why it's not at least 8% here. Interest rates are higher here than in UK - right? It can only be the unrelenting chasing of capital gain by a foolish herd. If yields were to return to 8% then that would imply quite a correction indeed. If others suggest that rents can continue to rise enhancing the yield on lofty valuations think again because labour markets have cycles too and can render many houses/units vacant.

by JimboJones | 20th Nov 17, 2:50pm 1511142610

Lets say you bought the house 10 years ago slightly negatively geared, and since then rent has increased by $100 a week, that is another $5200 a year or $52,000 a decade. On top of the 50% plus capital gain. No brainer unfortunately.

by bw | 20th Nov 17, 2:56pm 1511143012

Why on Earth would the property have been allowed to become Positively Geared in the first place?! Isn't that the Name of The Game - let the taxman pay it off for you? Like as not, in the 10 years since purchase another (s) property has been added to the portfolio - to keep it all NG - and all that there really is, is the risk - Those Capital Gains you mention? Are all tied up in today's price....

by JimboJones | 20th Nov 17, 3:01pm 1511143279

The tax man only pays up to 33% of your 'losses', and that is assuming you have enough (or any) other income to offset. Hopefully soon it will be 0%

by TainuiBabe | 20th Nov 17, 6:23pm 1511155396

No doubt you will watching Foreign Exchange rates too, when making a decision to sell or not.

by The best statu… | 20th Nov 17, 1:28pm 1511137705

At lease a lot of houses in Sth Auckland have more people in it. They can afford it.

by NorthernLights | 20th Nov 17, 1:50pm 1511139030

Oh I don’t know
There’s a lot of unemployment in Epsom Remmers
I know Zach was saying his daughter couldn’t even get a job at McDonalds !

by Zachary Smith | 20th Nov 17, 4:13pm 1511147635

Just to be clear here my daughter is still at school and was looking for part time work.

by Chairman Moa | 20th Nov 17, 6:30pm 1511155808

Couldn't you give her some money from your property's capital gain of roughly $1000/day?

by Zachary Smith | 20th Nov 17, 6:36pm 1511156164

I think she wants to earn her own money. It's a dream job for school kids apparently. I have told them they can stay at home for the rest of their lives but they don't seem keen.

by Trying to build | 20th Nov 17, 6:54pm 1511157285

Strangely, I find your comment endearing (I don't think I have joined the dark side yet though)

by Allears | 20th Nov 17, 2:01pm 1511139675

No need to worry too much about these valuations. Most of us who've been around for a few decades know there's a decent recession looming and AK will get hit hard. We'll see those $1m properties back down to $750k again pretty quickly. That'll put most newish buyers, those first home buyers during the last couple of years, into negative equity and negative net worth. Like several who got slammed by the GFC they'll never recover. They'll get mortgagee sold up and go back to renting. It's what they voted for. Their Coalition of the Greedy will strip them of their wealth and make them needy. It's what happens when people only look at what they can bludge out of the system. People my age know that's not how the real world works.

by JimboJones | 20th Nov 17, 2:16pm 1511140587

Surely the coalition of the greedy would be the party that allowed house prices to increase by 46% in the three years since the last valuation?

by Didge | 20th Nov 17, 2:29pm 1511141373

Exactly Mr Jones.

by J.C. | 20th Nov 17, 2:45pm 1511142311

Surely the coalition of the greedy would be the party that allowed house prices to increase by 46% in the three years since the last valuation?

I'm sure that the COTG would explain these price rises as a "product of our success" and a natural response to supply and demand. I don't think they would take direct responsibility of "allowing it to happen". That would sound a little like a planned economy.

by tothepoint - d… | 20th Nov 17, 2:56pm 1511142990

Hi Allears,

Good to know that you've "......been around for a few decades.......".

As the old proverb goes: "Age and treachery will overcome youth and skill".

Enjoy your twilight years!

TTP

by JimboJones | 20th Nov 17, 3:06pm 1511143580

I think the saying now goes "selfishness and capital gains will overcome youth and skill"

by tothepoint - d… | 20th Nov 17, 3:24pm 1511144668

Not necessarily JJ,

There are heaps of younger people who have got into investment property.

Most of the ones I know rate property as a better bet than managed funds, KiwiSaver and so forth.

TTP

by mfd | 20th Nov 17, 3:34pm 1511145295

And most of the younger people I know understand the benefits of diversity - these days the research is so much more accessible. It's the people who caught the huge and likely unrepeatable property price gains recently that seem to be blinkered to the risks of being in a single asset class.

by Retired-Poppy | 20th Nov 17, 3:46pm 1511145992

mfd, very true. As a young thing, I remembered my first wins on sharemarket. I felt like a winner - I was flying high like I was on cocain. Then it all crashed. I learned very quickly the value of working hard for a living, saving with diversity, diversity and diversity ha-ha!

by tothepoint - d… | 20th Nov 17, 3:48pm 1511146103

Hi mfd,

Chances are that people who aren't over-indebted and purchased with a long-term timeframe will do ok.

But, agree with you...... there are always those who take too high a risk. Some of these will pay the price: bankruptcy, mortgagee sales etc.

by TainuiBabe | 20th Nov 17, 6:25pm 1511155527

I noticed you didn't mention shares?

by Chairman Moa | 20th Nov 17, 6:28pm 1511155700

I can see Phil Goff is rubbing his hands with the new rates revenue income with record high RV. I'll be lining up for one of those 200K+ jobs.

by Zachary Smith | 20th Nov 17, 6:30pm 1511155808

Eh, total rates take doesn't change.

by dtcarter | 21st Nov 17, 10:06am 1511211984

Total rates take is going up 2.5% as set in the annual budget. Revaluations are irrelevant to council income.