Auckland ratepayers will receive new property valuations tomorrow, showing an average 9% drop in residential capital valuations.
It comes as the council prepares to roll out a 5.8% average rates increase from July.
The new rating valuations, based on property market trends in May 2024, show variations across property types and locations throughout the region, with industrial, lifestyle, and rural properties bucking the downward valuation trend.
Auckland Council chief financial officer Ross Tucker said the valuations reflect the economic downturn since the previous valuations in June 2021.
“As we know, the last council valuations from June 1, 2021 were completed close to the market peak and between then and May 2024 the economy and property market generally trended down,” he said in a media release
“Therefore, as most people would expect, the May 2024 capital values (CVs) are lower than the previous 2021 CVs for many properties.”
The new valuations are not intended to accurately reflect current market value.
Instead, they’re used to determine how the city’s rates burden is shared among property owners, with those whose properties decreased in value less than the 9% average likely to face higher-than-average rate increases.
“If your residential property value has reduced more than the average (-9%) change between the two valuations, you can expect a smaller rates increase than the 5.8%.”
The overall capital value movements between the 2021 and 2024 valuations show industrial properties increased 5%, while commercial properties fell 5%.
Lifestyle and rural properties both increased by 4%, while residential properties dropped by 9% on average.
Properties closer to Auckland’s central business district generally experienced larger value decreases, with Albert-Eden, Maungakiekie-Tāmaki, Waitematā, Whau and Puketāpapa areas all seeing drops of 13 to 14%.
But, values in areas further from the city centre held up better, with Hibiscus and Bays, Upper Harbour and Franklin experiencing smaller decreases between 1 and 4%.
Auckland Council chief economist Gary Blick explained the context behind the shifts.
“At the time of the 2021 rating valuation in June 2021, the official cash rate had been at an all-time low,” he said.
“We saw exceptionally low mortgage rates and strong upward pressure on property prices. The 2021 rating valuation reflected those higher prices.
“In contrast, the 2024 rating valuation in May 2024, occurred when the OCR had been lifted to its recent high of 5.5%. Higher interest rates cooled buyer demand, leading to a decline in property prices.
“Despite that fall, the median house price as at May 2024 was still above the level just prior to the OCR cut of March 2020, and that remains the case today.
“The recent economic cycle – with its unusually steep climb and fall – helps explain why some properties have had swings between the two rating valuations.”
Tucker said most Auckland ratepayers will see some degree of rates increase from July 1, with the average annual rates for a residential property valued at $1.29 million set to be $4069 – an increase of $223 per year or about $4.30 weekly.
The valuations do not change how much the council takes in rates, as this is set annually following community consultation. For the upcoming financial year, Auckland Council has approved an overall average rates increase of 5.8% for residential ratepayers.
The new valuations will be available on the Auckland Council website from tomorrow, with formal notices to be posted or emailed from Friday.
