New CV release delayed again by level 4 lockdown! Auckland property valuations could surge this year!

Council staff said last week: “The pandemic’s level 4 lockdown restrictions mean CVs cannot be released until December. Staffing is limited during lockdown, and valuers’ ability to carry out on-site audits of property values has also been affected.”

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Council staff and property valuation organisation Quotable Value will jointly undertake this round of CV assessments. Their main purpose is to provide a basis for levying local property rates in Auckland, including on residential, industrial, commercial and retail properties.

 

CV Valuations bring joy to some and concern to others!

Ms Li, a Chinese landlord in Auckland, said: “I own two properties in Auckland, one rented out and the other my own home. The CVs due to be released this year will affect our entire family’s tax expenses. For property owners like us who have no plans to sell, any increase in CV will mean higher financial outgoings.”

Many owner-occupiers expressed similar views: “Only those preparing to sell or hoping to borrow more from the bank want CVs to rise sharply. Those of us who own just the home we live in will have to pay more council rates because its value has risen. That is unfair to us.”

Property investor Mike said: “As investors, we actually have mixed feelings about the release of CVs. I need to sell high-value homes to make a return. The higher the CV of a property I have bought, the greater my returns will be. Naturally, we want our properties’ value reflected in this round of CVs.”

 

The council has repeatedly stressed that the comprehensive valuation of all Auckland properties every three years is intended to calculate each owner’s share of council rates, rather than provide a basis for sale prices. In practice, however, the vast majority of property sale prices are linked to CVs, so each impending council CV release attracts intense interest from large numbers of property owners.

 

Experts: CVs set for explosive growth this year

 

Industry observers say that repeated pandemic delays mean more than 4 years have now passed since the council last assessed Auckland property CVs in July 2017. Auckland house values have risen by more than 30% since the pandemic began last year. The CVs expected to be released in December this year are therefore set to show an explosive increase in Auckland property valuations.

 

A representative of the Real Estate Institute of New Zealand said: “In 2017, Auckland’s median house price was NZ$836,000. Now, the average house price across New Zealand has reached around NZ$940,000, while Auckland’s median is as high as NZ$1,200,000. The release of new CVs in December will set another record for Auckland property values.”

Figures show that Auckland currently has around 600,000 homes. This year’s CV release is expected to affect hundreds of thousands of Auckland property owners. CVs indicate not only market sale prices but also how much each household pays in council rates. The new CVs will leave more property owners facing higher council rates bills. 

CV Do higher values necessarily mean higher council rates?

Many people worry that rising CVs will push council rates even higher. Last week, the council said, “If your new CV shows that your property has increased in value, but by less than the average, this could mean you pay less. Property revaluations are only one reference point for levying council rates. The council uses new CVs to help calculate each property owner’s share of rates. Changes in CVs do not alter the council’s total rates revenue.”

 

This year, the council has already announced its total rates requirement, with plans to collect NZ$2,300,000,000 in the 2022–2023 financial year, the first year the new CVs take effect. CV is therefore one factor in determining council rates; rates do not rise in direct proportion to a CV increase. CVs simply determine each owner’s share of the total rates bill. 

 

“In practice, whether council rates rise or fall depends on the street and area where a home is located. If your property is in an Auckland area where house values have risen strongly, your rates may be higher,” said Nick Goodall, head of research at property data analytics company CoreLogic.

Deputy Mayor Bill Cashmore said: “If the average CV of properties in a neighbourhood has risen 50% over these three years, a property on that street whose CV has also risen 50% would not need a rates increase. But if a property’s CV has risen 100%, its rates would be adjusted upwards. Equally, if a property’s CV has not risen, its rates would be adjusted downwards.”

 

Mayor Phil Goff previously told the media that the new rating valuations were a technical exercise rather than a political one. He said the government had drawn up a fair and reasonable rates increase plan that would keep Aucklanders’ burden manageable while balancing investment in the city’s transport system, housing and environment. Although CVs are crucial, most property owners will not see changes to their rates assessments until next year.