Council valuations are past their use-by date. It’s time to move on – Chris Knox

Council valuations are a year old on release and don't reflect property values, Chris Knox writes. Photo / Alex Burton

THE FACTS

• Auckland Council’s valuations were already 12 months old when released on Tuesday.
• Residential property values dropped by an average of 9%.
• According to the council, the valuations are “not for estimating the current market value of properties”.

Auckland Council just released its official property valuations. The release included the proclamation that residential property values dropped on average 9% across Auckland.

Even as they were released, the council’s chief finance officer Ross Tucker said the CVs were not for estimating the current market value of properties, or for mortgage and insurance purposes.

What were they for then? To work out the rates each property owner should pay.

The valuations don’t reflect the current market value because they were released a full year after the actual valuing took place.

OneRoof estimates that in that year, property values have changed between -9% and +8% depending on the suburb.

Nick Goodall, head of research at Core Logic, went so far as to describe the CVs as “old news”.

So, the council has dropped a seemingly official figure into Auckland’s property market that is actually more than a year old.

Perhaps the market will simply ignore the new CVs. On the other hand, the year-old values might confuse the market, resetting some of the shifts from the last 12 months.

Aucklanders are supposed to ignore the valuation part of the council valuations, and only use the CVs to understand what will happen to their rates.

But wait: just because your CV went down doesn’t mean that your rates will go down!

CVs are not directly related to rates. Changes in rates depend on the amount of money the council wants to raise and the CVs are used to distribute those rates among the ratepayers.

The council doesn’t need to release outdated property values to calculate – or communicate – how rates are distributed.

They simply need to rank the properties of Auckland in order of value and use their relative ranks to calculate the rates.

This would be more informative to ratepayers. A decrease in relative rank might mean a decrease in rates – although currently it’s more likely to simply mean less of an increase.

And conversely, an increase would mean you are going to shoulder more of the city’s rates burden.

Currently, the valuations don’t even give that level of information.

They force the council to expend resources explaining why your rates are going to move in the opposite direction to your valuations.

Releasing council valuations is a poor way to communicate rates changes.

They aren’t timely enough to help the market, and they may even disrupt the market – so maybe this should be the last time they are released.