Property Report: The higher the capital value, the bigger the rate bill

Papatoetoe's 136 sales in the first three months of 2013 reveal prices are 17.1 per cent up on CV values. Photo / Greg Bowker

A quick glance at how Auckland capital values have moved in less than two years illustrates the point that it's unwise to read too much into triennial assessments when settling on what a house is worth.

Your rating CV is just that - a value set every three years to give a local authority a sound basis to levy rates. The higher the capital value, the bigger the rate bill.

At the time CVs are set, they represent the "probable price" that would have been paid for the property, less chattels.

But as prices move, CVs are soon overtaken and they are useful only in helping to assess market value when they can be compared to actual latest selling prices. From that exercise, Property Report - with the guidance of PropertyIQ - produces a suburb-by-suburb directory showing how much selling prices rose (or fell) on average in relation to capital value in the last quarter.

But it's an inexact science. CVs are set on a mass appraisal basis using computer-fed information such as age and size of property, building materials and recent local sales. No one comes knocking on the door, so a brand new kitchen and bathroom won't come into calculations.

The number of sales for the quarter can also skew results in our data pages.

In the three months to March 31, for example, Green Bay in West Auckland recorded a staggering 36.1 per cent average gain since the new CVs were set in July 2011. Green Bay may indeed be in strong demand, but a closer look shows there were just four sales for the quarter. All it needed was for one or two of those houses to have an artificially low CV to give a distorted result. The previous quarter, with 12 sales to get rid of some of the bumps, may have been nearer the mark with a rise of 20 per cent.

Suburbs with 30 or 40 sales a quarter can probably be relied on to give an accurate picture on how general prices are running in relation to CV.

Look, for example, at Avondale (up 25.8 per cent against CV over 49 sales), Mt Roskill (up 25.2 per cent over 62 sales), Glenfield (up 22 per cent over 46 sales) and Papatoetoe (up 17.1 per cent over 136 sales). All of them have recorded enough sales to suggest the rises could reasonably be used as a broad indicator across the suburb in question - but not necessarily to an individual property, which may have been saddled with a CV that was unrealistic and unchallenged.

While CVs have limited market influence as time passes, real estate agents will generally advise home-owners to object if they feel their property's value has been set too low.

Of course, a successful appeal means higher rates, but plenty of people still have a degree of faith in capital values and a high CV may be worth the price.

In the first rating round of the new supercity, the Auckland Council received around 11,500 objections - just under 2.25 per cent of the properties assessed (against the overall 2011 national average of about 2.4 per cent), including industrial and commercial units.

About two-thirds of those objectors thought their properties had been under-valued, says council spokesman Peter McKay, and a greater proportion of them lived in higher-value suburbs.

The overall result: values were increased on about 55 per cent of all properties, and reduced on 25 per cent, leaving 20 per cent untouched.

The second supercity valuation is now a little over a year away. The way things are heading, some of the country's most expensive suburbs - such as Takapuna, Herne Bay and St Heliers - may end up bearing less of the 2015-2018 rates burden than the more modest areas of New Windsor, Onehunga or Sunnynook.