How will new RVs affect sale prices?
It’s a surefire bet that house prices will rate a mention around the traps in Lower Hutt next month.
The latest rateable value (RV) figures from ratings agency QV, which determine how councils divvy up their rates takes, are due to be released from November 9, with letters to home owners to be sent out from November 14.
The new valuations will form the basis for rates for the Hutt City and Greater Wellington Regional councils from July 1 next year.
But what relationship is there between RVs and sale prices and how much of an impact will they have on an already heated market?
Professionals Lower Hutt managing director John Ross said RVs alone painted an inaccurate picture of market value, especially a couple of years after they were calculated.
The valuations were so out of sync with how much market values had increased that Ross wouldn’t even look at a property’s RV if he was appraising it.
He expected RVs would go up significantly next month across the board in Lower Hutt.
About a year ago there were roughly equal numbers of properties selling above and below their RV. But by this August, 96 per cent of 137 resi- dential sales surveyed in Lower Hutt sold above RV.
‘‘We’ve seen the percentage above RV go up with the sudden change of the market,’’ Ross said. ’’The highest performing three properties were in Naenae. Typically I would say at a glance we are seeing a majority of properties selling about 40 per cent above RV.’’
Low RV figures could give buyers false optimism about how much a property was worth, and for sales via auction ’’can be bait to a buyer’’.
‘‘The best auctions are where the RV is ridiculously low because all the buyers think it’s going to be a bargain.
‘‘The bidding pushes it to what it actually sits or beyond because so many people are having a crack at it.’’
Conversely, the hardest properties to market were often the ones where the RV sent a signal to buyers that it would be out of their price range when in fact it may sell for a lot less.
‘‘Every single day in our auction room we sell houses at very different prices to what we actually thought.’’