Northland latest property revaluations & impacts
The latest property revaluations across the Far North have revealed a ripple effect as the property market on the East Coast eases and home buyer attention turns to more affordable locations in the Hokianga and inland centres.
Quotable Value Ltd says trend has been reflected across New Zealand as home buyers are priced out of popular coastal markets and turn to more affordable locations.
The new impetus has resulted in sharp valuation rises in the Hokianga and inland areas such as Moerewa, Kawakawa, Kaikohe and the Northern Ward between Kaitaia and North Cape.
This is the direct reverse of the 2004 revaluation in which the coastal belt continued to maintain valuation momentum while inland areas and the Kaitaia-North Cape area showed relatively light growth.
The most significant impact in the latest revaluation has been Kohukohu where valuations have on average risen by close to 500%. Properties with land values in 2004 of around $8000 now hold valuations of between $20,000 and $50,000. However in dollar terms these areas remain among the most affordable in New Zealand and continued to be seen as value for money, the company says.
The 36,806 properties revalued have shown average growth factors of 104% for land values and 62% for capital values, lifting the total capital value of the Far North from $10.1 billion to $16.4 billion in the three-year cycle.
The average home in the Far North is now valued at $345,477 ($275,256 in 2004), the average lifestyle block at $434,168 ($258,368), the average farm at $1,049,869 ($579,082) and the average commercial or industrial site at $730,248 ($496,711).
Quotable Value says the new valuations reflect an increasing demand from investors for commercial and industrial properties resulting in very strong growth in areas such as Waipapa and Kerikeri.
While valuation increases at Paihia have eased, the tourist town now commands the highest values and rentals in the Northland region.
The company says recent buoyancy in dairy and produce markets have also had an impact in the rural sector. However forestry land continued to languish behind the field.
On a sector by sector basis, valuations have increased on average as follows:-
Commercial/industrial 113% (land value) and 47% (capital value)
Rural 114% (LV) and 81% (CV)
Lifestyle 101% (LV) and 68% (CV)
Forestry/mining 49% (LV) and 45% (CV)
Residential 103% (LV) and 59% (CV)
The shift in the valuation hotspots can be illustrated in the following residential property examples:-
Karikari Peninsula 132% (LV) and 76% (CV)
Doubtless Bay 116% (LV) and 98% (CV)
Kerikeri 60% (LV) and 32% (CV)
Paihia 89% (LV) and 50% (CV)
Kaikohe 216% (LV) and 79% (CV)
Rawene 352% (LV) and 119% (CV)
Comparison with neighbouring district councils:-
Rodney District Council (revalued in 2007): Land Values up 62%; Capital Values up 42%; average house value $568,000.
Whangarei District Council (revalued in 2006): Land Values up 112%; Capital Values up 67%; average house value $332,000.
Kaipara District Council: To be revalued this year.
VALUATION PROCESS FACT FILE
- Revaluations are required to be carried out on a three-year cycle to provide a uniform basis for levying district and regional council rates
- The council contracted Quotable Values Ltd to carry out the review. The review cannot be influenced by the council
- Valuations were assessed as at 01 September 2007.
- The valuations prepared by Quotable Values Ltd are audited by the Office of the Valuer General before the results are published. The OVG is an independent authority within Land Information New Zealand.
- Valuations do not drive the market –they reflect what is already happening.
Although based on market movements, revaluations are not “market values.” - The valuations are a snapshot of the market situation as of 01 September 2007. (If a current market value is required an independent registered valuer should be commissioned). Visual roadside inspections are carried out on the majority of properties as part of the assessment process (approximately 80%)
- Tools used in the revaluation process include sales in the area, demand to buy, rental demand, the type of property, improvements since the last revaluation, market surveys of residential and commercial trends, land zonings, deposited plans and floor plans, subdivisions, building consents and the general appearance of the property at the time of the roadside inspection.
The new valuation rolls are now open to inspection at council Service Centres or on the Quotable Values Ltd website at www.qv.co.nz
Land owners have until 22nd February 2008 to lodge objections to their valuations with QV Ltd.
Anybody who has not yet received notice of the new valuations in the mail should contact QV Ltd on 0800 787 284
MISCONCEPTIONS ON VALUATION RISE IMPACTS
The fact that land values have increased on average at around 104% across the Far North does not mean that rates will double or even that rates will increase.
Many property owners will not experience major impacts on their rates account for the new rating year which starts on 01 July. However this will depend on the actual level of the new property value.
This is the message the Far North District Council wants to send to its ratepayers following a spate of public concern at huge increases in property values as a result of the latest revaluation assessments carried out by Quotable Value Ltd.
Results of the revaluation were released to property owners earlier this month.
Revenue & Policy Manager Chris Ellington said today there appeared to be huge misconceptions in the community over the relationship between valuation increases and the impact these have on individual rate accounts.
“As a general rule of thumb, if the land valuation on your property increased more than the average across the district, then you can expect to pay more in rates. If your land valuation increase was less than the average, then you can reasonably expect that your rates will reduce.
“If your land value increased at about the average across the district, there should be very little change in your rates,” he said.
Each year the council determined through the Annual Plan process the programme of work and the amount of money it would need to run the council for the following 12 months. A rate in the dollar was struck, based on the valuation rolls, to raise the money needed.
If valuations doubled, the council reduced the rate in the dollar to a level which would produce the amount of rate money needed for that particular year.
“For example, the current rate in the dollar is 0.0052598 cents. If the council wanted to raise the same amount of money based on the new valuations, the rate in the dollar would more than halve to 0.0023616 cents,” he said.
“Because a valuation has doubled or trebled simply does not mean rates will go up by a similar amount,” he said.
In a case study of 34,000 properties using the new valuations, 20,000 (59%) had increases greater than the average of 104% and 14,000 had increases less than the average.
“In general this is a direct reversal of the 2004 revaluations when 18,500 properties (58%) had less than the average increase of 70%, and 13,500 increased by more,” he said.
Mr Ellington said this did not mean there would be no rate increase this year. The council would be releasing its draft Annual Plan for 2008/09 for public consultation in March. Whether the rates lifted or decreased and to what extent, would depend on the level of activity proposed –not on the revaluations.
“This is a decision which the elected council makes after the community has had the opportunity to look at and comment on the programme that has been proposed,” he said.
The following are examples of the percentage movement in rates which would have occurred had the current rates been struck on the new valuations (based on averages):-
Land uses:
Residential down 4.1%
Accommodation down 5.7%
Commercial down 4.3%
Dairy down 4.8%
Forestry down 20.2%
General farming up 7.6%
Orchards down 8%
Industrial up 38.8%
Northern Ward
Awanui up 8%
Kaitaia up 7.8%
Ahipara up 7.7%
Karikari Peninsula up 4.4%
East Coast Bays up 1.9%
Eastern Ward
Whangaroa coastal down 2.4%
Kaeo rural up 7%
Purerua Peninsula down 15.9%
Kerikeri coastal down 10.1%
Kerikeri residential down 7.8%
Puketona coastal down 28%
Haruru Falls down 0.8%
Paihia residential down 3.8%
Kawakawa up 7.5%
Russell down 8%
BOI/Rawhiti down 21.9%
Opua down 4.5%
Moerewa up 8.9%
Southern rural up 14.2%
Western Ward
Kaikohe rural up 14.4%
Kaikohe urban up 6.5%
Ngawha/Ohaiwai up 18.5%
Rawene up 15%
Opononi/Omapere up 6.4%
Hokianga rural up 19.3%
Kohukohu up 19.6%
Capital value rating change flagged
Major fluctuations in the impact of the latest revaluations in the Far North have encouraged the Far North District Council to seriously consider a change to capital value rating.
The council’s interest in reviewing the basis on which rates are calculated was first raised in the Far North Future Plan (LTCCP) and the council now intends to follow through in this year’s draft Annual Plan.
Shifting from the current land value formula to capital value rating is expected to be the preferred option when the council moves into a public consultation phase over the next few months.
However the exhaustive process required to change the basis of rating means even if there is strong community support for the move, the change will not take effect until the 2009/10 rating year.
Revenue & Policy Manager Chris Ellington said today the latest revaluations showed much less volatility in capital values as opposed to land values. A change to capital valuation rating potentially would even out some of the peaks and troughs which were creating anomalies under the current system.
As an example, the current revaluations showed some of the largest land value hikes had occurred in areas with high deprivation indices. This raised moral issues of the ability of some property owners to pay an increased share of the rates.
“This is less likely to be an issue under capital value rating. There is a growing trend towards capital value rating across the country with more than 50% of councils now using capital values as the basis on which rates are calculated ,” he said.
“However any change will require a full public consultation programme. What the council is doing at this point is to indicate that capital value rating is its preferred option,” he said.