Auckland homeowners to get 'bombshell' property valuations

NZ Herald,
Publish Date
Wed, 19 May 2021, 9:17AM
(Photo / NZ Herald)
(Photo / NZ Herald)

Auckland homeowners to get 'bombshell' property valuations

NZ Herald,
Publish Date
Wed, 19 May 2021, 9:17AM

Auckland homeowners can expect a "bombshell" rise in their council valuations when city-wide revaluations are released later this year, a property lawyer says.

City house prices have soared 35 per cent since the last valuations in 2017, with Auckland Council revealing it now expects to issue new valuations – officially known as capital values or CVs – this October.

Mum-and-dad homeowners, retirees and property investors will all be keeping a close eye on the new valuations as it can affect how much they pay in council rates, and how much they can borrow from banks.

But many will be bracing for higher rates bills on the back of their new CVs.

The Herald has also learned some property owners have delayed listing their houses for sale in the hope higher CVs will help secure a better price.

Property lawyer from Schnauer and Co, Nick Kearney, said most of Auckland's 560,000-odd homes would have made big jumps in value.

"It will be a bombshell for many."

The Real Estate Institute confirmed prices had skyrocketed, leaping 35 per cent in the four years since Auckland's last mass rating valuation.

"Back in July 2017, Auckland's median price was $836,000 and is currently sitting at $1,125,000, a new record high for the region," a REINZ spokeswoman said.

And while the new council valuations are important, they are unlikely to have an immediate impact on most owners, as they won't affect council rates bills till July 1 next year.

CVs were also only one factor in determining how much people paid in annual rates, an Auckland Council spokeswoman said.

If a home's CV jumped by a certain percentage that didn't mean the owner's rates bill would rise by the same percentage.

"Valuations are just one component used to determine what portion of the region's total rates a property owner is invoiced for," she said.

Changes to CVs did not increase or decrease the total dollar value council collected from rates, the spokeswoman said.

Instead, council set a fixed amount of money it wanted from rates each year and then used CVs as one factor to help determine what share each home and commercial property owner needed to pay.

Council hoped to raise $2.249 billion from rates in the 2022/2023 financial year – the first year the new valuations would come into effect.

That was a 3.5 per cent jump on 2021/2022's proposed $2.138b rates revenue.

Staff from council along with property valuers Quotable Value would assess Auckland's rateable properties, including residential, commercial, industrial and retail properties.

CoreLogic head of research Nick Goodall said rises and falls in rates were usually more the result of whether your home had risen or fallen by a greater value than other homes in your suburb.

For instance, if your street had become more desirable and was found to have risen faster than other streets, you might be in line for a greater increase in your rates bill, he said.

Homeowners often wanted their CV to fall in the hope their rates bill did likewise.

But owners looking to sell in the near future typically wanted their CV to rise because it could influence how much buyers were willing to pay.

Property Investors Federation's executive officer Sharon Cullwick said landlords were unlikely to pass on potential rates hikes to tenants through higher rents.

Investors often had mixed feelings about valuations, she said.

She personally preferred higher valuations because during downturns in the market, a higher CV could help convince banks to lend bigger home loans to buy other properties

Aucklanders upset with their council valuations can lodge an objection with the Valuation Tribunal.

Cullwick once contested an Auckland Council valuation and had her property's CV increased by $170,000 because valuers had undervalued it.

However, the council spokeswoman and real estate agents warned home owners not to treat CVs as a definitive value of their property.

"The general revaluation of all properties helps us work out everyone's share of rates. The aim of the general revaluation is not to provide values for property owners to use for marketing, sales or any other purposes," the spokeswoman said.

Goodall said the city's tenants shouldn't necessarily fear rent hikes on the back of the new council valuations.

His firm's research had shown landlords were not typically able to pass on increased costs from owning investment properties to their tenants in the form of higher rents.

Stats NZ data showed rents had typically risen by 3 per cent each year in a pattern following rising incomes rather than increased costs to landlords.

Property values are public information and can be viewed online.

text by Anne Gibson and Ben Leahy, NZ Herald