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: