Inside the property market: What you need to know about rates, CVs and where houses are cheapest - The Front Page

Economist Ed McKnight explains why there is a lot of conflicting information about house prices. Photo / George Heard

Rates have increased across the country this week, with some cities better off than others.

Auckland Council has confirmed a 5.8% average residential rates increase, the same day Wellington’s council struck a 12% lift in rates.

Meanwhile, Gisborne residents face an average rate increase of 9.95%, which equates to $400 or less for 80% of homeowners.

The increases have come at the same time as council valuations in Auckland dropped by 9%.

But what do lower CVs mean for your rates bill? And, what does it mean in the context of the wider property market?

Opes Partners economist Ed McKnight told The Front Page that many people are surprised when their CV value appears to drop, but they’re still paying a higher rates bill.

“Your house price doesn’t necessarily impact the exact amount of rates that you pay. It does, but in a kind of roundabout way. The way it works is that Auckland Council, or any of the councils, will say: How much money do we need to raise this year? And, spoiler alert, it’s more than last year.

“The CV is used to say, how much of a share should each homeowner have to pay? Well, if your house is a bit more expensive than somebody else’s house, you probably have more money. So you pay a higher share of those rates. So, even though most people’s CVs have gone down, their house values have gone down; what really matters is how much yours has changed compared to everyone else’s,” he said.

When it comes to the housing market overall, McKnight said parts of the country are pretty flat or still going down.

“Parts of Wellington over the last 12 months have seen property prices fall 4%, 5%, in some cases up to 9% ... Compare that to places like Invercargill over the last 12 months. House prices are up 4% since the bottom of the market about two years ago. Invercargill city house prices are up about 15% since the bottom of the market, Dunedin’s up 8%, Queenstown up 11%, and Christchurch up 7%.

“So, if you’re sitting in Auckland, you’re probably seeing a very flat property market, but not everywhere in the country is flat. We are in this period where you’re gonna get a lot of conflicting information about our house prices,” he said.

Listen to the full episode to hear more on myths about valuations, rates, and the current state of house prices.

The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am. The podcast is presented by Chelsea Daniels, an Auckland-based journalist with a background in world news and crime/justice reporting who joined NZME in 2016.

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