Hawke’s Bay: Property values plummet in cyclone and flood-hit Wairoa, with some halving

QV lead valuer Damien Hall said Wairoa’s residential housing market has experienced several challenges since the last revaluation. Photo / Warren Buckland

The values of homes in flood-hit areas of Wairoa have dropped up to 50% since 2021.

New rating valuations prepared by independent valuers Quotable Value (QV) on behalf of the Wairoa District Council paint a grim picture for the region struggling to recover from two flood events.

Wairoa’s total rateable value has reduced by 11% to $3.78 billion, with the land value of those properties down 19% to $2.49b since the district’s 2021 revaluation.

The updated value for all 6958 properties in the district shows residential housing has decreased by an average of 1.4% putting the average house value at $367,000, while the corresponding average land value has decreased by 8.4%.

QV lead valuer Damien Hall said Wairoa’s residential housing market had experienced several challenges since the last revaluation.

“The cyclone was a turning point in what was a good market at the time. The further flood events in June 2024 caused additional damage across the district at a time when the economy was still struggling,” Hall said.

“Flood-damaged areas, specifically in Wairoa township, have seen a greater drop than the overall average, with some areas falling between 35% to 50% from their 2021 values.

“Purchasers are cautious and reluctant because it is harder to source mortgages and insurance for flood-damaged properties, particularly in areas such as North Clyde.”

A QV spokesperson said Wairoa was not the largest drop in average land and property value they had seen this year.

“Palmerston North and especially Wellington experienced much larger three-yearly rating values reductions. South Taranaki had a smaller average home value reduction but a much larger land value reduction. Kawerau also had a larger average home value reduction,” they said.

“Wairoa wasn’t the only local council area to experience reduced capital and land values this year either and it’s not likely to be the last after the previous triennial revaluation was undertaken at around the peak of the market.”

Wairoa District Council’s chief executive Kitea Tipuna said rating valuations are carried out on all properties in New Zealand, usually once every three years, to specifically help local councils apportion rates for the following three-year period.

“The effective rating revaluation date is August 1, 2024, so any changes in the market since then won’t be included in the new rating valuations.

“The updated rating valuations are independently audited by the Office of the Valuer-General and need to meet rigorous quality standards before the new rating valuations are certified. Rating valuations should reflect the likely selling price of a property at the effective revaluation date and are not designed to be used as market valuations for raising finance with banks or as insurance valuations.”

Tipuna said rating values were just one of several factors councils use to allocate rates. A property owner’s rates do not necessarily change by the same percentage as the valuation change.

“The valuation is only a means of levying and distributing the rates across the district. The total amount of rates required for the district does not change because of the revaluation of the district.

“The council determines rate requirements after considering the region’s long-term budget every three years. It looks at the cost of services the district needs and subtracts revenue from fees and charges and other sources, which leaves the rates required to run the district. That rate requirement is then shared across the district based on each property’s capital value.”

Hall said areas such as Mahia Peninsula had shown resilience.

“Residential values have held from their 2021 values and higher quality properties are still seeing an increase in value, although activity remains quiet.”

The rural market has also seen a decline over the past 18 months, with values well back from their 2021/2022 peak.

On average, pastoral properties have experienced a 22% decrease in value since 2021 and land is down 26% for the same period – though this varies based on individual property characteristics. Forestry for both capital value and land value is down 11% from their 2021 values.

The Wairoa lifestyle market showed a trend of increasing values from late 2021 through to 2022 for vacant land, with a drop-off in value and activity in 2023.

The Wairoa commercial and industrial market has been relatively quiet over the last three years with limited sales.

Commercial property values have declined by 13% and property values in the industrial sector have fallen just shy of 2%. Commercial and industrial land values have decreased by 15% and 19%, respectively.

What are rating valuations?

Rating valuations are carried out on all properties every three years to help local councils assess rates for the following three-year period. They reflect the likely selling price of a property, not including chattels, at the effective revaluation date, which in this case was August 2024.