Homeowners in New Zealand’s largest city must wait at least another four months for updated capital valuations (CVs) from Auckland Council because of amendments required at the highest level.
The Valuer-General delayed the CVs, which were due in October last year, asking the council to amend some of its data which was being done now and expected by May this year.
CoreLogic head of research Nick Goodall said CVs set the property value every three years to help set rates, which was apportioned for each property across the city.
He said it was unlikely a property’s CV would change so much in three years.
Capital valuations were broken down by land value, and improvement value – being the house or buildings on the property.
The improvement value did not equate to replacement value, for example the cost of rebuilding the house if it burned down, and Goodall said this could be one of the reasons Auckland CVs had been delayed.
He said the Auckland Anniversary Weekend floods in January 2023 highlighted the issue.
“The amount of insurance (claims) which must have happened over that period of time, that has made them look at this and go, ‘This isn’t reflective of the true market value of this property because we’ve seen property that have now been paid out from insurances that are well above the CV, because of those reasons’.
“So maybe that is part of the reason why there’s been a lot of questioning here.”
While it’s expected valuations would remain stagnant, Goodall also suggested another reason for the delay could be that valuations would go down.
But he said CVs were not designed to indicate the market value of a property, for example what someone was willing to pay for it.
Instead automated valuation models updated property values all the time, were used by banks, and gave a true indication of the market value of a home.
Kiwis ‘CV-obsessed’
Martelli and Co buyer’s agent Alexandra Vincent Martelli said Kiwis were “CV-obsessed” compared to in Australia where she previously worked in real estate.
“One of the challenges we’ve always had for buyers and representing buyers, is understanding where vendors expectations are based on that CV, how the sales agent has potentially used that CV as a marketing tool and then what the actual value of the property is.”
She said in New South Wales it was a requirement for an agent to tell a buyer the same price indication they had given the vendor.
In New Zealand, buyers were simply referred to the CV and left to work it out.
Martelli said a lot of homes were currently selling under the 2021 capital valuations.
“And so the concern is, these new CVs, will they reinforce those 2021 prices and as such the vendors will keep their expectations, or actually will we start to see a bit of a dip in those CVs.”
Auckland Council head of rates, revaluations and data management, Rhonwen Heath, said in September the Valuer-General advised the council’s data was of good quality but it needed further work for the council to gain certification.
“The main issues relate to rating valuations being consistently applied across the region in relation to sales data, zoning and development potential.
“This work will ensure properties with similar attributes receive valuations that have been assessed on a consistent basis.”
Heath said the remedial work required did not relate specifically to either reduced values or impacts of the 2023 storm events.
The work also needed to ensure it accurately reflected the market as at May 1, 2024.
She said since October, the council had been confirming timings for the property revaluation data to be resubmitted to the Valuer-General.
“The revaluation file is now expected to be submitted to the Valuer-General in April.
“This means in May we will be in a better position to confirm when property valuations will be publicly released, once we have confirmation from the Valuer-General and our valuation partners.”
Heath said the council hoped to complete the process so that the new CVs could be applied from 1 July.
“However, we need to balance this with ensuring a robust valuation process so ratepayers receive values that are as accurate as possible, and Aucklanders have confidence the values used to determine rates have been accurately calculated.
“Revaluation does not affect the amount of money we collect from rates – it helps us work out everyone’s share of rates.”
An increase or decrease in property value might not mean a property owner paid more, or less in rates, she said.
Any change in rates cost was determined by how a property’s value changed compared with the average increase, or decrease across the Auckland region.
“If your property value has changed by more, or less, than the average, you may pay more or less than the average 5.8% rates increase forecast for the 2025/2026 year.”
Heath said the additional time council took to get property valuations right would help Aucklanders have confidence the values used to determine the next financial year’s rates were accurate.
rnz.co.nz
