Higher rates the flipside of soaring house prices

Many homeowners will be braced for higher bills following market buoyancy.

If you live in Auckland and neighbouring houses have sold for unheard-of prices in the past two months, you can expect your home's official value to shoot up.

The city's property valuers have looked at sales in April and May and will study more over the next couple of weeks as the council updates values set in 2011, when the market was in a lull.

It's the largest revaluation undertaken in New Zealand, with 525,000 homes studied. Most homeowners can expect to see their house's capital value jump, with the latest assessments made when property prices are at record highs.

The flipside? The new values will be taken into account when setting new rates next year.

Houses are regularly selling for much more than their last recorded valuation date, July 1, 2011. The average house price in the region then was $540,482, compared with $713,709 now.

A sprawling clifftop mansion named Waimana at 16 Page Point in Mellons Bay was given a valuation of $3.38 million in 2011, but sold for $8.9 million a year later - a difference of $5.52 million.

The 898sq m home has 180-degree views from Rangitoto to Mellons Bay and sits on a 6080sq m section.

Mike McColl of Newmarket's Evolution Realty said valuations in some suburbs were "way off", and they could be a double-edged sword. If they went up, owners risked higher rates, but if they went down, there was a risk of the house selling for less, he said.

In 2011, 11,500 people objected to their valuations.

Geoff Burton's beachfront mansion in Glendowie dropped in value by $890,000 - from $2.39 million to $1.5 million - despite the suburb's values rising 7.79 per cent.

He fought the value, and it was bumped up to $1.9 million - still $490,000 below its former value.

Council valuation services team leader Peter McKay said that of the people who objected, about 80 per cent were offered a new value that was 20 per cent different from the original - higher or lower. Twenty per cent were settled outside that range.

The number of people who took their case to the Land Valuation Tribunal was 111, but only one case made it to a hearing and was dismissed by the court.

About two-thirds of the objectors thought their properties had been under-valued.

Mr McKay said sales data from the past two months and over the next few weeks would be crucial in setting the city's new values.

Building consents granted for houses since their last valuations, such as for subdivisions and extensions of a house, would also be taken into account.

His team of about 50 valuers - some contracted from Quotable Value - were experts in specific suburbs.

Properties wouldn't be visited individually because of the vast number of homes that needed to be valued.

Valuation notices will be sent to residents on November 10.

How it's done

How Auckland Council is valuing your house:
• Up to 50 valuers who specialise in different areas use a "mass appraisal" technique.
• Homes are physically visited if a value is contested.
• Valuers study:
- Recent sales of your house
- Recent sales prices in your area
- Building consents for your house since the last valuation (such as for subdivisions/extensions).