What is a CV?
CV stands for capital value. It is an estimate of the total value of a property, taking into account a variety of factors including value of the actual land itself, the value of your house, any other improvements you have made to the land, the location including school zones, and recent house sales in the area.
The Capital Value (CV) or Rateable Value (RV) of your property is one in the same. Every three years Auckland Council reassesses the value of every property within its jurisdiction, primarily to determine how much a property owner should contribute towards the city’s upkeep via their rates bill. So, what is a CV, and how do the council determine this magical figure?
“A CV is a snaphot of the value of a property at a particular point in time – in this case July 1st, 2017. The council will analyse sales of different categories of all types of properties in all parts of the city as at that date, then reflect those statistics back into a database of information they hold for each individual property. From here, they will determine its capital value.”
“For example, for a villa in Ponsonby, they will gather all the information they can around sales of similar homes at that time, then interpret that information, via computer model, to reach a figure for the current valuation of that property. It’s certainly not a broad-brush approach – they try to be as property specific as possible.”
All Auckland CVs are calculated every three years by Auckland Council, the most recent was in 2014 and now the 2017 ones which have just been released.
They serve as a property value guide, but often do not accurately reflect the market value of a section. The market in some suburbs in recent years has outpaced the CV with homes selling for double the CV.
How are CVs calculated?
CVs are calculated using mass appraisal techniques - meaning valuers don't personally visit and assess every single home.
Instead when the council assesses the value of each property, it considers the following factors:
- What prices properties are selling for in the neighbourhood.
- The type of property – house, town house, factory, shop, etc.
- Information about industrial and commercial rental trends obtained from market surveys.
- Changes that have been made to a property since the last revaluation.
- Information in the District Valuation Roll, which contains the valuation details of individual properties in the Auckland region.
How do CVs affect rates?
CVs are used by the council to calculate how much you have to pay in rates. But Auckland Council master data and valuations manager Emad Asgari said a change to a property's CV does not automatically mean rates will increase or decrease.
"Valuations do play a part in working out the amount of rates paid by each ratepayer, but they are not the only factor and should not be viewed as such," Asgari said.
Each year, Auckland Council's budget sets out the amount of rates needed to "keep Auckland running". The process includes consultation with the public to help decision making.
The total is then split across ratepayers using a combination of factors - including the CV of a property.
The average rates rise was 2.5 per cent this year, Homes.co.nz head of marketing Jeremy O'Hanlon said.
"If your CV increases by more than the average increase, you'll have a steeper rise in rates than that 2.5 per cent. If your CV rises less than the average, you'll have an increase of slightly less the 2.5," he said.
In 2014, Auckland CVs grew by an average of 33 per cent. O'Hanlon believed it would be more than 40 per cent this time around.
However, revaluations would not impact on rates until July 2018, after Auckland Council finalises its 10-year budget.
Do increased CVs flow through to increased sales prices?
Buyers tend to look at CVs to assess a home's sale value, but O'Hanlon said they did not reflect market value.
"When they are released, CVs will already be nearly half a year old, so they're a reflection of what happened not what will happen. We're not expecting them to have a real impact on values," he said.
In 2014, the average selling price for an Auckland home was about $750,000 - 33 per cent less than the current average price of just over $1 million.
How should buyers and vendors use or interpret these new figures?
“They are indexed figures and should be treated as such, and not something you’d want to hang your hat on as the true value of a property. They should not be relied on in isolation, but used in combination with many other factors, such as actual recent sales and a property inspection or an appraisal by a Real Estate Salesperson may assist.”
What is the average Auckland CV?
Based on current data the highest residential CV in Auckland was in Long Bay on the North Shore, at $113 million.
The lowest was in Kohimarama, valued at $1000.
If you don’t agree with the new valuation, can you object or have it re-assessed?
“Yes, everyone is entitled to question their Valuation and the process is clearly defined on the Council's website. The objection period is open for up to a month after valuations are notified."
What are the main reasons people object?
“Don’t panic. With the proviso that the Council don’t require an additional increase in rates over the previous year, an average increase in CV would mean no increase in rates. However, for those properties impacted by the Unitary Plan there may be significant increases if the property value increases are significantly more than the average.”
Does Auckland's Unitary Plan affect CVs?
Data would suggest so.
Under the Unitary Plan much of Auckland was rezoned. Mixed housing urban zones, terrace housing and apartment building zones allow for greater housing intensification while single house zones have much stricter conditions for development.
According to data from property website Homes.co.nz, more than 50 per cent of Auckland properties, sold from July 2016 to July 2017, in high density mixed housing urban zones, went for more than one and a half times the CV.
Meanwhile, only 32 per cent of properties in low density single house zones sold for more than one and a half times their CV.
Aside from this slight curved ball, the fact remains that buying and selling a property is probably one of the biggest transactions any of us is likely to make, so relying on the CV is not recommended for vendors or buyers. Sure, it’s a useful metric to have, but more specific information, gathered by a professional valuation expert such as Clayton Munting from Edwards Valuation, will give a much more accurate assessment of the value of a property.
For more information, please visit this information page on Auckland Council’s website.
Where can I see my new CV?
Auckland Council's website has published the latest round of CVs on its website on November 20 and have a search engine where home owners can find their property's value by entering their address.
Homes.co.nz have also published the new CV's for viewing also.
Sources: Stuff, Ray White, Clayton Munting