There’s a wave of disappointment across many Auckland suburbs after homeowners received their updated capital values (CVs). CVs dropped an average of 9% across the city since the last valuation, although some homeowners saw their valuation drop by as much as 20%.

The new CVs offer a snapshot of how property values have changed since the last valuation in 2021, reflecting broader economic conditions, market trends, and buyer behaviour. But it’s not all doom and gloom, and while many homeowners are eager to understand why and how their property’s worth has moved, it’s important to understand what CVs actually represent, how they’re determined and the effect they have on the overall market.

WHAT ARE CVs?

Capital Values (CVs) are estimates of a property’s likely market value at a specific date - in this case May 1, 2024. CVs are assessed by independent valuation providers and are used by councils to help calculate rates, rather than serve as a precise measure of a property's current market selling price. While they provide a general indication of value, they don’t account for a property's unique features or improvements made since the valuation date.

HOW ARE CVs CALCULATED?

With 630,000 properties to appraise there were too many to inspect individually, so the numbers are calculated using mass appraisal techniques. Valuers assess sales data from comparable properties in the area and consider factors such as land size, zoning, location, and the type and age of buildings. For example, the CVs of apartments in Mount Eden will be aligned with the sales of apartments in Mount Eden.

WHY HAVE CVs FALLEN?

Auckland Council was very clear that the last two valuations were taken at very different stages in the economic cycle. The last round of data was collected on June 1, 2021, when the property market was nearly at its peak, interest rates were low and there was a high level of pressure on the market. It’s a substantially different snapshot compared to now with high interest rates and a cool property market. The council says that explains the huge difference in values and why some properties experienced such a big swing.

WHAT AREAS WERE BEST AND WORST OFF?

The housing market downturn caused CVs to drop by 9% on average, but it appears Auckland's luxury baches bucked the trend. The average CV on Great Barrier Island, Waiheke Island, and Omaha all jumped by 15% or more.

Of all the city's 277 suburbs, 69 saw an increase in their average.

On the flipside, fifty-four suburbs saw their CV tumble by more than 10%, with the biggest percentage falls in Kingsland, Point England, and Newmarket. The biggest dollar drops were in some of the wealthiest suburbs including Herne Bay, Ponsonby, and Glendowie.

General Manager for Bayleys Auckland Residential, Raymond Mountfort says while he expected a dip, there were some properties he was surprised to see take that much of a hit.

“The inner-city suburbs that are dominated by apartment living probably saw the highest drop on average, some by as much as 15%.”

“I feel for those people because there’s definitely going to be some disappointment there.”

Mountfort believes the inner city was the hardest hit due to a raft of changes in the area between 2021 and the latest appraisal.

“There's been a lot going on in the city, in terms of the works being done by the council and the effects that's had on people's lifestyle.”

“We’re coming out of that now, but right back in 2024 when these valuations were assessed, we were right in the middle of a lot of work that was very, very disruptive.”

HOW ACCURATE ARE CVs?

Mountfort says it’s important to remember that CVs are based on mass calculations and algorithms.

“So when you've got specific details and specific features on your own home they would not have been taken into account.”

Mountfort suspects suburbs like Herne Bay and Ponsonby would be prime examples of this.

“There's a lot of things that have been done to those homes and a lot of features that have been added over time.”

“A lot of them have been refurbished inside to an incredibly high standard and well above the average.”

CAN I CHANGE MY CV?

Mountfort says all hope isn’t lost if you suspect you’ve been hard done by in the latest round of CVs.

“You can get a hold of the council and have your ratings reviewed and the process is relatively simple, but it will cost you a fee.”

“The advice is to provide as much information as you can, and any case needs to be supported with a technical reason for the objection.”

Alternatively, Mountfort suggests getting a trusted Bayleys agent to appraise your property beforehand as a great first step.

“That might give you some indication as to whether it's a relevant and worthwhile exercise.

Auckland Council says homeowners have until July 25th to lodge a review.

You can do so here.

WILL MY REDUCED CV EFFECT MY SALE PRICE?

With reduced CVs many vendors are concerned about what that will mean for their sale price, but Mountfort says it’s important to remember that CVs are just one of many ways to measure a property’s value.

“Generally as a rule real estate agents, buyers and sellers will all regard the CV with a certain level of skepticism and they're all probably well aware that it doesn't really represent the true value of the property at the time.”

“Often, it's already historical by nature and out of date. For example, we're talking about a year-old valuation in the latest appraisals, and people are aware of that.”

Mountfort says in a real estate transaction the best way to value a property is by having a competitive marketing campaign.

“Get multiple interested parties and put yourself in a position where you can deal with the highest and strongest of that interest.”

“Very few successful selling campaigns start with a firm view on value. They usually start with an open mind to what the market will do and what the market will bring. So cast the net as wide as possible to the market, and that will tell you the true value of a property.”

Bayleys Head of Insights and Data Chris Farhi agrees and says there’s plenty of other data sources out there to help determine value.

“CVs being published doesn't really matter. The market generally appreciates that they're okay in bulk, but they're not actually that accurate when you look at an individual property. That’s because the council hasn't inspected the property, and it doesn’t know what it's like, and all the details of what's going on inside.”

WHAT ABOUT VENDOR EXPECTATIONS?

Farhi says vendors often base price expectations on their property’s CV, and the adjusted values may mean they could be more willing to meet the market now too.

“Vendors will look at what a real estate agent’s appraisal is saying, but they're also likely to have in the back of their mind what the CV is as it will generally be higher than what the agent would have been appraising the property in most cases.”

“The council’s CVs dropped 9% on average between 2021 and 2024 and since 2024 the market has been relatively flat. That means the average homeowner’s expectations might be nine or even 10% higher than where that market is at.”

COULD THIS HELP WITH OVERSUPPLY?

Farhi expects the effect of the new CVs to provide a small boost to sales numbers off the back of a reset in vendor expectations.

“Just having that extra pressure on people who may have been holding out for a CV value, that may actually help to just provide a little bit more functionality to the market.”

“The average CV has moved down 9% and with the median house price for Auckland around $1 million that’s a $100,000 difference. Any little thing that's going to help to get vendors back into the right zone to transact is going to help the market to get going.”