UPDATE on property valuations
Earlier this morning in my Property Value Jumps of 50%+ Is Not All Good News For Southern Auckland post I had commented how property valuation jumps of over 50% were not all good for Southern Auckland.
Just out from Auckland Council we have a breakdown of how much individual suburbs with Papakura up 65% and Manukau up 57% in property revaluations.
From Auckland Council:
Published: 16 November 2017
Auckland’s property trend revaluation data shows significant value movements across the region and an overall average increase across all sectors of 45 per cent.
Reflecting the upward trend in the Auckland property market, the residential valuation shows an average increase in value of 46 per cent since the 2014 valuation.
Higher demand in outer suburbs
Local board areas with the largest movements – of more than the 45 per cent average – are in Waiheke, Ōtara-Papetoetoe, Papakura, Māngere-Ōtāhuhu, Manurewa, Henderson-Massey, Maungakiekie-Tāmaki, Franklin, Howick, Rodney and Upper Harbour.
Movements within the remaining boards range between 11 per cent and 44 per cent.
The largest movements in the outer suburbs appear to be a result of higher demand in areas where property is less expensive.
Central Auckland values now increasing near average rate
Auckland Council Head of Rates, Debbie Acott, says that Aucklanders should remember that a high increase in property value doesn’t necessarily mean there will be a corresponding increase in rates.
“We expected to see an increase in valuations since the last revaluation in 2014, so movements in the 40 per cent to 50 per cent bracket really aren’t a surprise,” she says.
“Generally speaking, the values in Auckland’s outer suburbs appear to be catching up with the 2014 revaluation.”
“Areas that increased the most in the last revaluation – by and large central Auckland – are now moving roughly along the average. Those that didn’t last time – mainly outer Auckland – are the ones with the highest increases this time.”
“Property valuations are used to help us work out everyone’s share of rates – they don’t mean that we collect any more money. However, we won’t know the impact of this revaluation on rates until we agree our next budget in 2018, so I encourage Aucklanders to view these valuations with that in mind.”
Lifestyle properties show 57% increase in value
Commercial and industrial properties received a rise of 43 per cent and 47 per cent respectively, while lifestyle properties increased by 57 per cent and rural by 35 per cent.
Property owners will receive their notices in the mail or via email from 20 November.
“Because of Auckland’s dynamic property market, and valuations only capturing a moment in time, they should not to be viewed as current market value,” says Ms Acott.
Population growth, low interest rates drive increases
Auckland Council chief economist David Norman says that the rise in residential property values reflects at least three things.
“First, Auckland’s strong population growth over the last three years has not been matched by increases in the number of new houses being built, and this has pushed prices up. Second, record low interest rates have allowed people to bid up prices to secure somewhere to live because housing has been in short supply. And third, the Unitary Plan has added a lot of value to properties that can now carry higher intensity residential development than before.”
All councils are required by law to revalue every property in their region every three years. This year in Auckland more than 549,000 properties have been revalued, including every piece of land except roads and waterways.
Individual property data will be available from 20 November at the Auckland Council website.
- The council’s team of experienced, qualified and registered valuers work closely with independent valuation contractors.
- Before valuations are finalised, they have to be approved by the Valuer-General, who’s responsible for authorising rating valuations for the government across New Zealand.
- Capital Value, or CV, used as the rating valuation, is the likely price the property would have sold for on 1 July 2017. Its new value will be used to help set rates for the three year rating period beginning next year, 1 July 2018.
The real estate agent that sold our house told us three years ago due to high prices on the Auckland isthmus those looking for a first home would take their money and come to Southern Auckland as their dollars are worth more down this end. Three years later looking at valuation movements (and the lack of housing supply coming online until very recently) the move has certainly happened.
The high prices in Southern Auckland have a double whammy effect for existing residents especially those who might be renting here. The first being high prices (even though the median has come back around 12% due to more apartments coming through) mean getting your first home is just that further out of reach. The second whammy is the flow on consequence and that is rent. Rents go up to cover the higher prices (if the house has been sold recently), insurance and possibly rates. Those higher prices will come from lack of supply coming through and is pointed out in the second NZ Herald article here: Rental stock plummets: Auckland -35pc, Wellington -69pc
Rent stress (paying more than one-third of your income on rent) has knock on effects including health, crime and other negative effects. Moderate price and rent rises are to be expected for a large City but run away prices are dangerous. Why? Levels of gentrification can become extreme when prices and rents run away triggering the consequence of high levels of forced relocation of existing residents (thus upending communities). Moderate levels of gentrification or rather urban renewal however, is not all bad as it can trigger investment in public infrastructure and new businesses for an existing community. But moderate levels is not what we are seeing and why the large rises in both valuations and rents is not all good for South Auckland.
So to bring rent prices under control the same methods are needed as you would to moderate out house prices. Supply! Lots and lots of supply.
There is the good and the bad with a 65% leap in housing value in Papakura as I’ve mentioned.
Also if commercial and industrial property valuations are moving up at high rates then there are consequences as well. Commercial usually upscales itself but for industry it can trigger decamping from an area if the land values get too high. Mt Wellington, Penrose and Onehunga are up between 45% and 50% so while such rises will not threaten that industrial complex as of yet if those kind of rises continue the complex will become threatened (as residential and commercial will seek those areas out).