Brought to you by the Valocity Research Team: Wayne Shum and James Wilson

Background 

Under the Rating Valuations Act 1998, all Territorial Authorities are required to revalue the district within a three-year period. The last Auckland General Revaluation was in 2017. The COVID-19 lockdown in April 2020 made it difficult to conduct a reliable revaluation, and as a result, and at Auckland Council’s request, the Office of the Valuer-General agreed to defer the 2020 General Revaluation to 2021.

The Auckland property market has grown significantly since the Revaluation in 2017.  Ratepayers and media were questioning whether the substantial rise in rating valuations expected in 2021 may lead to the same proportional increase in rates payable. However, this is not the case. For example, in the previous General Revaluation in 2017, the residential sector showed an average increase of 46%. The general rates however, increased only 2.5% when the valuations were used to calculate rates.

The 2021 Revaluation will be as of 1 June 2021 and will be released to the public after October 2021. Ratepayers will have the opportunity to object to valuations should they disagree with the outcome. The valuations will be used to set rates from 1 July 2022.

How Rating Valuations are set 

Rating Valuations are calculated by comparing recent sales in an area, with considerations made for:

  • Property type
  • Zoning
  • Size, age, condition and quality of the home and amenities
  • Location
  • School zones
  • Desirable outlook

The valuations are calculated using mass-appraisal methods – not all properties are physically inspected by valuers.

A rating valuation comprises of three parts; 

  • Capital Value, which is the appraised fair market value excluding chattels 
  • Land Value, which is the appraised fair market value of the unimproved land 
  • Value of Improvement which is the added value of improvements to the land at time of valuation e.g. dwellings

All Rating Valuations are set on freehold basis and are exclusive of chattels. 

So how are the Rates set?

The Rating Valuation of a property is only one of the factors used to determine annual rates payable by households.  The overall changes in valuation does not equate to the changes in rates. Other factors involved are:

  • Actual use of the property
  • Targeted Rates applied for a location
  • Growth in number of property assessments
  • Overall Council Budget requirements

The 2021 General Revaluation will be used for Rates for the 2022/2023 financial year. Auckland Council hopes to raise $2.249 billion from rates for the 2022/2023 financial year, an increase from the previous 2021/2022 year which contributed $2.138 billion.

Potential Impact of Capital Value Movement 

To understand the impact that the increase in capital values might have on ratings, we have compared the median Capital Value to the median Valocity AVM estimate by suburb and property type to determine the value movements since the last Rating Valuations were set.

Property Type  Median Capital Value  Median AVM Value  Percentage Change 
Apartment  $560,000  $640,000  14.3% 
Dwelling  $970,000  $1,251,184  29.0% 
Unit / Townhouse  $680,000  $850,131  25.0% 

Table 1 – Overall movement for Auckland

Conclusion 

  • Lower priced suburbs have experienced higher increases since 2017
  • Suburbs near town centres and arterial roads such as Panmure, Mangere East and Waterview that are primed for redevelopment also experienced higher than average value growth – perhaps a result of unitary plan zoning incentivising developers to outbid occupiers
  • While rates increase year on year, only those with higher than average increase to their valuations will receive higher than average increase to their rates, relative to other property owners
  • It is anticipated that this revaluation may introduce new apportionments between Capital Value, Land Values and Improvement values which take into account the fact that land values are driving growth, with zoning changes facilitating further intensification

For further information or if you would like to understand how the Auckland Revaluation may impact your portfolio please contact wayne.shum@valocityglobal.com or james.wilson@valocity.co.nz

Appendix:

Overall movement for Auckland by Suburb

Dwellings Units / Townhouses Apartments
Suburb Change No of Properties Suburb Change No of Properties Suburb Change No of Properties
Omaha 57% 1256 Snells Beach 38% 62 Mangere 43% 118
Clendon Park 47% 1865 Morningside 36% 350 Flat Bush 38% 116
Mahurangi East 46% 104 Waterview 35% 194 Point Chevalier 35% 50
Matakana 45% 259 Rosehill 35% 89 Mount Roskill 33% 90
Otara 44% 3145 Ranui 35% 428 Avondale 31% 158
Rosehill 43% 942 Mangere East 35% 484 Onetangi 30% 50
Tawharanui Peninsula 43% 231 Botany Downs 34% 196 Otahuhu 30% 53
Henderson Valley 43% 405 Kohimarama 33% 382 Kingsland 29% 258
Mangere East 42% 4077 Warkworth 33% 132 Panmure 29% 86
Manurewa East 42% 903 Gulf Harbour 33% 321 Oteha 28% 178
Wiri 41% 508 Sunnyvale 33% 283 Gulf Harbour 27% 134
Waiatarua 40% 246 St Heliers 33% 769 East Tamaki 27% 117
Red Hill 40% 658 Kelston 32% 94 Birkenhead 25% 271
Westmere 39% 1493 Sunnynook 32% 209 Manurewa East 25% 71
Golflands 39% 822 Randwick Park 32% 54 Kohimarama 25% 153
Kingsland 39% 522 Clendon Park 32% 149 Mount Wellington 24% 344
Wellsford 39% 688 Manurewa East 32% 142 New Lynn 23% 535
Manurewa 39% 7211 Pahurehure 31% 74 Remuera 23% 1131
Panmure 39% 1501 Mellons Bay 31% 96 Orakei 23% 122
Algies Bay 39% 396 Totara Vale 31% 341 Onehunga 22% 535
Mangere 39% 3515 Glendowie 31% 169 Hobsonville 22% 571
Waterview 39% 954 Kingsland 31% 75 Papakura 22% 62
Clover Park 38% 1830 Otara 30% 66 St Heliers 22% 351
Leigh 38% 474 Golflands 30% 144 Stanley Point 21% 60
Point Chevalier 38% 2434 Half Moon Bay 30% 593 Papatoetoe 21% 70

Table 2 – Top 25 Suburbs by Category: only Suburbs/Category with more than 50 properties are displayed

Price Movement for Dwellings:

Price Movement for Units/Townhouses:

Price Movement for Apartments: