Wait till next year for house CVs

Auckland Council has sought legal permission to delay them until 2021

Aucklanders will likely have to wait until next year to find out their home’s new capital value after the council sought permission to delay its citywide revaluation process.

A source of fascination to property-mad Aucklanders, CVs can affect the prices homes sell for as well as the rates bill.

The latest citywide revaluations had been expected this year, but Auckland Council has now sought legal permission to delay it until 2021. That meant CV changes would only affect home owners’ rates bills from the start of the 2022 financial year.

Experts said attempts to estimate home values in the uncertain market created by Covid-19 could produce distorted results that might be unfair to home owners.

A year’s delay, on the other hand, would give the market time to normalise, council chief economist David Norman argued.

“At current low sales volumes post-pandemic, it is extremely challenging to show the medium-term trajectory of the market or credibly revalue properties,” he said in a newly released council paper.

The possible delay would also likely give council and ratepayers one less thing to worry about as they battled with job losses and the coming economic downturn.

The council announced in May it was facing a $525 million revenue hit from the Covid-19 pandemic — the highest faced by any Kiwi council and the highest in the city’s history.

To plug the gaping hole, it recently released an emergency budget that included dramatic cuts to spending on infrastructure and services such as libraries and community centres.

Council also gave ratepayers two options for next financial year.

Either pay a 3.5 per cent rate increase that had already been inked into the pre-Covid-19 budget or a lower 2.5 per cent increase that would give some relief to ratepayers struggling to pay their bills but deliver less money for community services.

At current low sales volumes postpandemic, it is extremely challenging to

. . . revalue properties. Council chief economist David Norman

Under the plans, ratepayers could expect the average household rates bill across the most populated part of the Super City to rise by about $130 for the 3.5 per cent increase and about $105 under the 2.5 per cent option. In other parts of the city, the household rises would be about $110 and $85 under the two options.

Changes to CVs do not increase or decrease the dollar value amount the council collects from rates.

Instead, the council sets a fixed amount of money that it wants from rates and then uses CVs to determine what share each home and property owner must pay.

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.

Home owners typically want their CV to fall in the hope their rates bill does likewise, but owners looking to sell in the near future typically want their CV to rise because it could influence how much buyers are willing to pay.

Every three years valuers use computer-generated models to estimate the CV of every property at a single point in time. The last revaluation was on July 1, 2017.

With 2017’s CVs now three years old, experts say buyers and sellers should instead use up-to-date valuations that take into account as many details of the property they are interested in as possible.