KEY POINTS:
Thousands of homeowners are about to receive official proof of the property market downturn.
And while house valuations will have gone up in most areas since 2005, the increase is nowhere near the surge of the previous period.
Suburbs that have enjoyed a big rise in value over
the past three years are likely to pay a larger slice of the rates pie to their councils next year.
Just who pays what in rates next year depends on the outcome of property capital valuations (CVs), which are being updated this year.
Late last year the Auckland City Council published a snapshot of property value increases between July 2005 and August 2007 that showed Otahuhu had increased in value 31.6 per cent, while areas like Mt Wellington, St Johns, Meadowbank, Glen Innes and Pt England increased 23.5 per cent.
The central city area was the only one lagging behind, showing an increase of 5.3 per cent. The council will publish a similar update in its City Scene newsletter this month, but city valuers expect property values will have fallen 5 to 7 per cent. They could fall further by the end of the year as real estate agents report homes selling for their 2005 CVs or not much more.
City valuers say the average 2008 CV rise is likely to be around 15 per cent - in 2005 the average increase was 41 per cent.
Melanie Gallagher, regional manager for QV Rating, which does 80 per cent of the local body CVs on contract, agreed that while there would be some increase in property values overall, they would not be anywhere near the rises experienced three years ago. Three years ago the North Shore's revaluations had risen 70 to 80 per cent. This year QV was expecting an average increase of 10 to 30 per cent.
North Shore coastal property would not see the same "dramatic rises" seen in past years, Gallagher said. Instead it was more likely to keep pace with inland property.
Blue Hancock, QV's manager for the central district, predicted his area would rise a little "but not a lot".
Queenstown would be flat, but "late starters" such as Invercargill and the West Coast would rise. Rotorua and Whangarei had also gone up in the last property cycle.
Auckland City, one of 25 local authorities that will update their CVs this year, will need to do some last-minute adjustments to CVs, based largely on sales between April and June this year. But with CV notices not due to be posted out to 175,000 ratepayers until October 20, a council spokesman said valuers would need to adjust the figures if the market fell further. North Shore City will follow at the end of October with Manukau sending out new CVs in December.
Meanwhile, valuers and real estate agents are warning some property owners may discover their valuations have shown little movement.
A council valuer said inner-city apartment owners would be better off in terms of the rating share as city apartments would not rise in value compared with the 2005 CVs.
However, any hope of a reduction in next year's rates is unlikely. While property values may have slumped, costs for local bodies have spiralled. Councils, competing on the world market, face hefty rises in construction materials such as steel and cement, and oil-based products such as fuel and road bitumen.
Andrew McKenzie, general manager of finance for the Auckland City Council, said it would be a "difficult" task to hold the rates to the council's rate of inflation (about 5 per cent) next year, an undertaking the council had made to ratepayers.
Last week the council sent out its rates notices for 2008/2009 which will rake in $420 million ($20m, or 5.1 per cent, up on last year) of its $550m budget.
Out of that, the council will need to fund about $280m worth of special projects including the Auckland Art Gallery upgrade, Aotea Centre carpark repairs, an Aotea Square upgrade and the city footpath improvement project.
While many city real estate agents consider themselves lucky to get a sale around the last CV mark, prices for good lifestyle properties out of Auckland are still holding.
Other areas updating CVs this year include Kaipara, Waikato, Western Bay of Plenty, Rotorua, Gisborne and Napier.