Land values could hike up our rates

Palmerston North property values have surged ahead in the latest QV rating valuations released this week, driven by unprecedented housing demand.

The outstanding feature of the increases is the 68 per cent average rise in residential land values, which in some parts of the city have doubled or nearly doubled.

And the areas experiencing the strongest growth are the older, more established and modest suburbs and townships, including Longburn and Ashhurst, Cloverlea, Awapuni, Roslyn and Takaro West.

Those gains stand in contrast to the 2015 revaluations, where the biggest gains were in areas like new Kelvin Grove and Summerhill.

QV property consultant Jason Hockly said the unprecedented increase in the value of section prices was driven by supply and demand.

He said the city did not have a great deal of land available for new housing, and developers had been slow to take advantage of changed planning rules designed to make it easier to create medium-density housing in established parts of the city.

The total or capital value of residential properties had also increased, on average by 36 per cent.

The average value of a home, at $418,000, was still at the low side compared with national figures.

Although the higher valuations might be good news for sellers, the shift in fortunes was likely to bite next year when the city council strikes the rates.

Finance strategy manager Steve Paterson said increased valuations did not necessarily mean increased rates.

But the new rateable land values would influence how the rates burden was shared.

People whose land values had gone up by more than the average could expect the rates impact to affect them more than others.

Compounding the shift for homeowners was the fact that non-residential property had seen a lower growth in values.

While single-unit residential properties made up 63 per cent of the city’s total land value in 2015, they now accounted for 68.2 per cent of the total $10 billion value.

‘‘Because residential land values have increased at a faster rate than other sectors, residential properties will pay a larger share of the total rates than at present.’’

Initial calculations suggested most homeowners would have been paying $140 to $250 more if this year’s rates had been set on the new valuations.

Paterson said it would be next year before the council decided how much in total it needed to raise from rates, and whether it would make changes to the way individual rates bills were calculated.

The new rating valuations can be accessed online and will be in the post this week.

People have until December 13 to lodge an objection if they think QV has got it wrong.