Steve Koerber's Old Blog

Remuera's house sold name since 1998 – 021864166

How accurate is your new Capital Valuation (CV)?

Posted by Steve Koerber on October 21, 2008

Auckland City Council is required by law to revalue all properties every three years.  If you would like to check the Capital Value (CV) of any property in Auckland here is the link to the Auckland City Council webpage.

What does your Capital Value mean?

It is an assessment of the probable price that would have been paid, including land and buildings, for the property if it had been sold on 1 July 2008, updated to reflect changes in properties up to 30 June 2008.

It is not the market value for a property.

The capital value does not include chattels which will need to be added on when estimating an appropriate sale price.

How close to my CV will my house sell for?

You should use your CV as a very “very” rough guide.  Your CV could potentially be 30% or more out, either above or below your real market value.  I have sold many homes for figures that vary from one extreme to the other when compared with their CV.

As an example, a property I sold after a competitive auction in September 2008 had a 2005 CV of $1,130,000 at the time of the sale.  The new 2008 CV is $1,370,000.  It was in a street in which many homes had sold in the $1,000,000 to $3,000,000 range in the three years since 2005, hence the apparent increase in value.  The sale price however was only $1,060,000.  The council got this one very wrong.

There are many other examples of homes that have recently sold in excess of the new 2008 CVs. 

How values are assessed

The process of revaluation reflects the changing nature of Auckland city, it’s development as New Zealand’s largest centre of commercial activity, and it’s growing population. Properties are valued on a site by site basis and in context with other properties in the area and other suburbs.

The valuation process consists of the following main stages:

  1. Property inspections

Before each three yearly revaluation council inspects approximately half of all residential properties from the roadside to check that their records are up to date.

Checking half the properties means that every property will receive an inspection each six years. In addition, council inspects between 5,000 and 6,000 properties annually as a result of building consent revaluations.

For each inspected property, council checks the property classification (ie house, town house, apartment, factory or shop) to see that it is correct. They review improvements made to the property, including garages and pools, to see whether any have been made or removed since the previous valuation. They also review the quality and condition rating of improvements. Land attributes, such as view and contour, are checked for accuracy and consistency with surrounding properties.

  1. Sales and rental analysis

Valuers review what properties are selling and renting for in your area.

Council obtains information about residential and commercial rental levels from various sources (tenancy services, market surveys, real estate agents, property management companies).

  1. Valuer General’s audit

The Rating Valuations Act 1998 requires the Valuer General to audit revaluations before giving approval for the values to be published.

A rigorous audit process is carried out over a period of three weeks. This audit

  • checks the processes used to prepare the revaluation
  • carries out statistical analysis of sales to determine the accuracy of the assessed values
  • may require random checks of properties.
  1. Publishing of proposed values

Once the Valuer General approves the process and the values, council publishes a public notice and sends out a valuation notice for each separate rating unit to the owner of the property and the ratepayer, if different. The notice advises the new values and the closing date for objections.

  1. An objection period

The Rating Valuations Regulations 1998 prescribes that objections must be lodged before the expiry of the date specified in the public notice. The objection period is 30 working days calculated from the date of the public notice for general revaluation and 20 working days for other valuations.

  1. Property rates setting

Council uses finalised values for setting rates from 1 July of the year following their publication unless they have been amended as a result of an objection review or there has been a change to the property. They continue to use the published values for setting rates until the objection is finalised.

They use the annual value rating system, which means property values will be based on either:

  • the amount a property might earn in one year if rented (the estimated gross less 20 per cent, or 10 per cent if there are no buildings on the land) or
  • 5 per cent of the property’s capital value

It is a requirement of the Rating Valuations Act 1998 that they use the highest figure of these two options to determine the rateable value of the property. This means that a sample of residential and commercial property owners will receive an enquiry requesting rental information.

Advertisements

6 Responses to “How accurate is your new Capital Valuation (CV)?”

  1. Neil said

    So if valuations can be so far out, and real estate agents say they are only a very rough guide, do you think more people should appeal them?

  2. Hi Neil,

    It really depends what motive you would have to appeal your CV. If you think it is too high and you would like to reduce your rates, then an appeal is worth a try. If you think it’s too low because you want to sell, raising it can give some potential buyers more confidence. However, most buyers know that real value is market driven. Cheers

  3. […] Posts How accurate is your new Capital Valuation (CV)?About MeRemuera Sales Statistics – Dec 2008Remuera sales statistics – July 2008Real estate […]

  4. […] Posts HyperinflationHow accurate is your new Capital Valuation (CV)?$1 Reserve and No Reserve auctionsAuckland residential property prices have doubled every nine years […]

  5. […] Posts Sir Edmund Hillary’s Home SOLDHow accurate is your new Capital Valuation (CV)?How will the global financial crisis affect us?$1 Reserve and No Reserve auctionsHomes listed and/or […]

  6. […]   2008 Capital Value  $1,070,000 (what does this mean?) […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

 
%d bloggers like this: