The three yearly council revaluation cycle is always met with great anticipation by property owners and aspiring owners alike. Property owners are initially excited by what the council thinks their property is worth. This is often followed by a bit of worry about what the new value might do to their rates bill.
How does the council value my property?
There are simply too many properties to value each property individually so complex algorithms are used to estimate property values. Some of the variables used are recent comparable sales, property type, zoning, land size, location, school zones etc.
The valuations don’t consider anything that councils don’t know about so if you’ve replaced your roof or carpet, this won’t increase the CV of your home. If, however you’ve added an additional room to your home, and it has been consented, this will increase the value of your home.
What about my rates?
All councils are required to revalue all the properties within their boundaries every three years to ensure rates are apportioned fairly. Property values don’t change uniformly and can be impacted by several factors. For example, the Auckland Unitary Plan will have a significant bearing on what Auckland properties are valued at this time around. Councils use the valuations as the primary way of measuring the total rates bill they require for the coming year.
Aucklanders are set to receive updated Council Valuations in March 2022. The valuations haven’t been done since 2017 due to Covid and the preliminary figures show an average increase of a whopping 32%. If you have a property in Auckland and it has gone up by more than 32%, you expect that your share of the total rates bill will be higher than the average increase. Lower value properties have appreciated at a higher rate relative to middle to high value properties. Therefore, low value homeowners can expect to pay a higher share of the total rates bill.
So why is this important?
A CV certainly provides a ballpark of what a property is worth, so it is a useful piece of information to start a property hunt. In truth, due to the fast-moving property market, your valuation is out of date by the time you receive it and of course gets less and less accurate as time goes by. Apps such as homes.co.nz probably give a more accurate assessment of what a property is worth as they feed their algorithms with more up to date data which should give a more accurate result than data that is up to 3 years old. One benefit is that lenders will often rely on a Council Valuation as a conservative value of a property which can save on expensive valuation fees for borrowers.
So, all in all, in our opinion, CV’s aren’t much more than a good conversation topic every 3 years. If you’re interested in what your property is worth, we have access to the same software that most of the bank’s use and would be more than happy to let you know what your property is worth.