Popular misconception: higher house values do not automatically equal big rates hikes.

His CV has gone up by 38 per cent in the latest three-yearly revaluation of Auckland residential property - but Hugh Pearson doesn't think his rates will rise much as a result.

Why not? Because his rates rose by only a fraction of the increase in the CV of his Birkenhead property last time.

Pearson (not his real name) says he does not believe his rates, which will not apply until July, will jump significantly even though the average house price across the region rose by more than 40 per cent since the last revaluation three years ago.

He discovered his new valuation by searching Auckland Council's online service today. Many other homeowners will receive emails or mail this week outlining their new valuations.

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Pearson's 2011 valuation was $670,000, which jumped to $900,000 after the 2014 revaluation, the last carried out under the Auckland Council's legal requirement to do so every three years. Now it has gone up to $1,250,000.

While there are fears among some homeowners that the much-publicised price hikes across 549,000 Auckland homes will result in high rates increases, Pearson says: "It was a big jump in value last time - about 34 per cent and 38 per cent this time. But last time our rates went up only by 7 per cent, from $2600 to $2800, though they did rise again slightly in following years."

Pearson says he knows a lot of people are worried about the impact of the new revaluation but Debbie Acott, head of rates at Auckland Council, says revaluations are used only to work out the share of rates across the city and should not be used as current market value or as a guide to how rates will change.

"Revaluation doesn't impact the amount of rates collected by Auckland Council, just the distribution of rates," she says. "What that means is, if the change in value for your property is in line with the average change across the region, the revaluation impact on rates will be minimal.

"The council's budget process isn't finalised until next July and there are numerous other factors to take into account when setting rates," she says. "We know housing is one of Auckland's hottest topics and there will be a lot of interest in the valuations - but there is also a lot of confusion over a complex process," she says.

Pearson's adjustment in rates was an example of how revaluation often had minor impact as his property had appreciated largely in line with the average change across the region.
"So if your house has gone up by 40 per cent and the average valuation increase is 40 per cent, you won't have to pay any more rates other than the normal incremental increase."

The new rates will apply only from July 2018 and to revaluations as at July 1, 2017.
Because it is impossible to inspect all those properties, valuations are carried out using mass appraisal techniques like:

• Sale prices of properties in the neighbourhood.
• Type of property - whether house, town house, factory or shop.
• Information from the District Valuation Roll, which contains valuation details of individual properties in the Auckland region.
• Data on industrial and commercial rental trends obtained from market surveys.
• Changes made to a property since the 2014 revaluation.

"The sale price of a property is a reflection of a number of factors - including the property's physical characteristics such as land area, floor area, building age, quality/condition, location plus zoning and market factors, " says Acott. "So there are a lot of factors affecting the calculation of rates."

A change of zoning under the unitary plan may affect the value if there is a change in the way that property can be developed. That could include potential for intensification or a new use - like a change from a residential to business zone - where the market reacts to that change.

"The valuers review all sales in the city to identify where this is occurring," she says.
All property valuations need to be approved by the Valuer-General, an office within Land Information New Zealand, responsible for rating valuations across New Zealand.

Visit Aucklandcouncil.govt.nz/revaluation to find out more