Property revaluations for Tauranga show an average 50 per cent rise. Photo / Getty Images
Residential property values in Tauranga are up an average 50 per cent on 2018, according to new council revaluations.
The rating valuations, to be sent to ratepayers from today, put the average value of a residential property in Tauranga at $1.12 million, with all suburbs seeing a substantial increase.
Tauranga City Council has attributed the rise to high demand, a lack of available land and listings, and Covid-related constraints on the building industry.
While the new values don't mean rates will rise 50 per cent, ratepayers in the suburbs with the fastest-rising values may be in for bigger bills.
The Lakes and suburbs along the Mount Maunganui and Pāpāmoa coast - including areas that generally already had among the highest average values - recorded the steepest rises.
Up 57 per cent were The Lakes, Pāpāmoa Beach/Wairakei, Pāpāmoa East/Golden Sands and Mount Maunganui Central - the city's highest-value suburb, with an average of $1.92m.
Rises in the rest of Pāpāmoā and the Mount were not far behind.
The only sub-million-dollar spot to match them was Matapihi/Maungatawa, up 57 per cent to $862,000.
The smallest lift for any suburb was Maungatapu, up 42 per cent to a $945,000 average value. The lowest average value suburb was Gate Pa/Greerton on $708,000 - up 46 per cent.
Both still exceeded the average revaluation change in Auckland of 32 per cent, according to valuations also released this week.
The average rise for commercial property was 33 per cent, led by Mount Maunganui (58 per cent) and Pāpāmoa (49 per cent). The CBD was at 35 per cent.
Lifestyle blocks were up 51 per cent, while hot demand and scarce supply of industrial property saw an increase of 70 per cent.
The revaluations were due in November but Tauranga City Council has said they were delayed largely due to Covid-19 impacts.
It said people can object to their revaluation if they believe it is wrong.
Council transactions services manager Jim Taylor said the data captured a snapshot of the market in July 2021 and would be used to divvy up the city's rates bill from July this year.
He said a 50 per cent rise in valuations did not mean a 50 per cent rise in rates.
Taylor said the rates figure people paid would be more dependent on the council's next annual budget - yet to be set by council commissioners - and whether a property's increase was below or above the city average.
Changes commissioners were considering making to the rating formula could also influence the rates.
The valuations were carried out by independent company Opteon using recent property sales data, resource and building consent data and sample inspections.
Taylor said the revaluations, done every three years, had been more challenging than in previous years. Valuers had more than 15,000 sales to sift through after the market boom that followed the first wave of Covid.
"It's a complex market and they had to work really hard to understand all the different pockets in it."
He said a lack of land for development in Tauranga had pushed up the land component of capital values significantly.
Bigger rises for lower-valued areas in Auckland were not echoed in Tauranga. Taylor said that could be partly due to a significant jump in those types of suburbs in the last valuation. The average rise in 2018 was 48 per cent.
"A lot of it was the lower end and the higher end only ended up at times at 10 or 15 per cent."
He said valuations for the CBD, where retail and hospitality had been doing it tough lately, were much lower than the city average.
"There will be some commercial properties in the CBD that will see rates decreasing slightly and there are some along the coastline that have seen large, large increases and that will have a more than average increase in the rates next year."
The council said property prices had continued to rise after July, so the new valuations may not reflect the current market.
The managing director of Tauranga-based valuation company Preston Rowe Paterson, Alex Haden, said he believed there was a "significant" difference between now and July last year given the "notable" rise in the latter part of last year.
However, he said there were signs the rate of increase has either slowed or stopped recently.
He said the increases made sense given the values were reviewed every three years and there has been "exponential" growth in that time.
He did not believe the delays were an issue because many people did not put a lot of reliance on rateable values as a gauge of market values.
He said there was "no surprise" in the increase in the coastal areas and Matapihi and Maungatawa were small sample sizes.
"I don't know if it's necessarily because they've had a change in popularity that's out of kilter to the rest of Tauranga."
Harcourts Advantage managing director Simon Martin believed some properties had gone up in value more than they should have while others had the reverse.
"It's pretty random … it's an indication but not a true market value."
He said areas with faster growth could be linked to new properties being built where there were previously sections.
The same could be said for the slower rising areas, like Maungatapu, where there had not been a lot of development, he said.
Downtown Tauranga chairman Brian Berry said some rates had gone up between 24 and 36 per cent in the CBD in August last year, which put pressure on businesses.
He speculated the CBD's lower rateable value increase could be the result of the "state of the CBD at the moment".
There was a risk of more businesses leaving the CBD for somewhere with lower rates if the latest valuation pushed the rates up anymore, putting pressure on owners' cash flow, he said.
Despite the difficulties, the city had a "positive vibe" the past few months, with the Farmers retail block opening and other developments under way.
