CV values decline, but market context matters
Auckland’s new council valuations (CVs) went live on Wednesday, June 10, showing an average 9% drop in residential property values. The data, reflecting market conditions as of May 2024, has unsettled many homeowners - but experts say the changes are expected and not reflective of individual market value.
“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%,” said Auckland Council CFO Ross Tucker.
“It is a worry,” says homeowner
Waiheke Island resident Amanda Wright saw her CV fall by $50,000 – from $1.15 million to $1.1 million, a 4.5% decline.
“I don't like that it's gone down, but I thought it would have gone down more, so I'm happy that it's not gone down that much,” Wright told 1News. “But it is a worry. There's that underscore of worry that the valuation’s not going to come back up. It's stressful, but I think it's going to be OK.”
Fringe suburbs hardest hit
City-fringe suburbs were most affected, with areas like Albert-Eden, Waitematā, and Whau seeing CV declines of up to 14%. Outer regions such as Franklin and Hibiscus and Bays saw milder drops of 1-4%.
CVs are not sale prices - they’re used to calculate rates, and a drop in CV doesn’t always mean a drop in sale price.
“CVs don’t reflect market value”
Homeowners and Buyers Association president John Gray said there was no reason to panic.
“People shouldn't be disappointed that their ratings valuations have decreased because it is a taxation tool,” Gray told 1News. “It does not reflect the value of the property in so far as its amenity or condition.”
Gray said his own home had its CV lowered by $250,000 — a change he welcomed.
“I’m very happy with that because... my rates should be less,” he said, acknowledging the overall increase in rates but noting a lower CV will still reduce the relative share.
Investors take the long view
Property Investors Federation spokesperson Matt Ball said most investors are focused on the long game.
“It's only really going to have an impact if you're selling right now. If you are, like most property investors, a buy-and-hold investor, then you’ll be thinking long term,” Ball said. “You’ll navigate probably several property cycles throughout your investment career, and this sort of thing really doesn't concern you that much.”
Valuations shouldn’t influence renovations
Wright admitted the CV drop had her reconsidering plans to renovate.
“Before the pandemic we were feeling optimistic... but now it feels, ‘oh gosh, have we overcapitalised’? We’re a bit more nervous,” she said.
Gray said homeowners shouldn’t base decisions on CVs.
“It would be foolish to be relying on a council valuation to make any decisions about the value of a property, whether it be for the purposes of doing renovations or building a new home on the site,” he said. “If you were going to get a mortgage, the banks would want a registered valuation from a qualified valuer.”
House prices set by buyers, not council
Ball added that market prices are still driven by what buyers are willing to pay.
“I think with these CVs, it might set a bit of a price in a buyer’s mind,” he told 1News. “But really, if you’re selling your house, the price will still be what that buyer is willing to pay,” he said. “The market is probably moving ahead of where the CVs are.”
