Are Council (Rateable) Valuations Reliable?
In November 2017, Auckland Council released its latest ‘Rateable Valuations’ (RVs). There were a number of news articles published on this release, as it was reported that values across the Auckland region increased by an average of 45% (since the previous RVs, 3 years prior).
RVs (all over New Zealand) are intended to be a snapshot of the estimated market value of a property as at the valuation date. In Auckland’s case, the effective valuation date was 1 July 2017. So, by the time the valuation information was released (in November), it was already several months out of date.
RVs should not, in my view, be relied upon as an accurate indication of a property’s value. I often cite an example of two identical houses, side by side (not uncommon in some former State house areas) being sold to private buyers. The two properties might be in the same condition and have the same RV at the time of the sale. One of the buyers does a full refurbishment of the property (replacing the kitchen and bathroom, repainting inside and out, recarpeting, landscaping, etc.) at considerable cost. The other buyer does nothing to their property. The refurbished property looks fantastic, and clearly has much more appeal than the unimproved property. However, the RVs have not changed. Additionally, if the property market changes (as it did in the 3 years prior to the most recent RVs) the RV has little resemblance to market value.
Despite not necessarily being reliable (in terms of current market value), RVs can still be handy. Banks do rely on RVs to a point, and higher RVs (than previously) can often enable the owners to access equity in their homes for the likes of property maintenance and other purposes without the need for a Registered Valuation (subject to other lending criteria being met).