Property Institute questions Council Valuation accuracy
Thursday, 26 October 2017
questions Council Valuation accuracy
Property Institute of New Zealand Chief Executive, Ashley Church, has reminded Auckland home owners not to read too much into new Council valuations when they’re released, next month, and says that the valuations are a ‘guesstimate’ rather than an accurate indicator of what a home is actually worth.
Councils throughout New Zealand are required to update Council Valuations (CVs) on residential, commercial, industrial and rural land once every three years in order to set rates. The latest Auckland figures are due next month and are expected to reflect a big increase in values based on the strength of the Auckland market over the past few years.
However, Mr Church says that there is a common misunderstanding about what a Council Valuation is and how much weight should be placed on it.
“CVs are conducted once every 3 years and they’re a ‘snapshot’ of the approximate value of any given property at that moment in time. They shouldn’t be regarded as an exact measure of the value of a home – and they’re certainly not intended to provide an ongoing price guide”.
Mr Church says that the methodology for a Council Valuation is very different to a formal valuation.
“A CV is a blunt instrument. It’s a computer based assessment of the value of your home based on what other homes in your area have sold for – whereas a formal Registered Valuation is conducted onsite and takes account of the condition of your home, any renovations you might have made, whether you have a pool, the number of bedrooms you might have, the condition of your home – all of the things that make it unique. There’s no comparison between the two”.
Mr Church says that, for many people, the Council valuation of their home is matter of curiosity and academic interest – but he says CVs shouldn’t be regarded as a replacement for a formal valuation.
“If you’re selling your home or wanting to use the equity in it to borrow money it’s important that you get your property valued formally. This will put you in a stronger bargaining position if you want to sell – and any increase in value could give you more clout with the bank if you want to borrow money to make a purchase or buy a business”.
Mr Church says that the question of the value of your home has also been further confused by the recent proliferation of ‘free’ online home valuation services.
“There are a couple of paid services that are getting much better at remote assessment – but the free ones are generally about as effective as reading tealeaves or chicken entrails and their advice should be treated with a grain of salt”.