Relevance of capital valuation debated
THE use of capital value (CV) as a measurement of what homes may be worth is a grey area for both sellers and buyers and most real estate agents see little relevance in CV data.
Even Quotable Value (QV), which is contracted to undertake threeyearly valuations for 85%90% of councils nationwide, said CVs were quickly outdated and a registered valuation was the best value indicator.
With escalating house prices in Dunedin and Central Otago, the relevance of using CV as a guideline is hotly debated — especially when some house prices have doubled since the last CV was done in 2016.
Quotable Value’s setting of capital values gives a combined building, land and improvement value.
In Dunedin recently, some council CVs have been eclipsed by prices paid, by as much as $100,000.
Quotable Value general manager David Nagel was contacted and asked about CVs relevance and purpose.
He said the intended purpose of the CV was to be used by local authorities to levy rates.
‘‘The CV is a snapshot of the likely selling price at the date of valuation, excluding chattels.
‘‘However they [CVs] date quickly, particularly in a moving market, and have less relevance to the potential selling price of a property the further time passes from the date of valuation,’’ he said.
That advice applied equally to both sellers and buyers.
Cutlers owner John Cutler believed CVs only gave a ‘‘rough guideline’’, given the timeframe in which they were reviewed.
‘‘CVs serve their purpose, as a rating mechanism,’’ he said.
Metro Realty managing partner Mark Stevens agreed prices well above CV were being achieved and counselled sellers not to use the council’s CV for assessing house values.
He had seen instances of retiree sellers expecting $300,000, based on their CV, whose properties went on to sell for $500,000.
QV senior consultant Paul McCorry said a valuation report by a registered valuer provided ‘‘the most robust indication’’ of a property’s value.
‘‘It’s current to the market conditions and is inclusive of chattels such as carpets, curtains etc.
‘‘It is a useful indicator of a realistic price that could be achieved for the vendor, and often it is required by the purchaser for mortgage lending purposes,’’he said.
CVs are partly computer modelled and done without a valuer entering the property or house.