The release of Wellington’s new council valuations on Wednesday is likely to trigger a wave of objections, real estate agents have told OneRoof.
The average RV for homes in the capital was released by Quotable Value (QV) today ahead of the online release tomorrow and the official notices being sent to homeowners by Wellington City Council next week.
The value of homes in the capital dropped 24.4% since the last council valuations were taken, in September 2021.
QV said the average Wellington house value in September 2024, when the RVs were assessed, was $1.086 million. The average land value decreased 36.7% to $621,000 over the same period.
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Some suburbs have been hit much harder than others. The average RV in Kelburn Central and Northland fell a whopping 29.3% to $783,429, while values in Horokiwi, Makara and Ohariu were the least impacted, dipping 12.12% in the same three-year period.
The total rateable value for the 82,591 properties in the city is $98,833,462,501, with the land value coming in at $51,250,813,101.
QV chief operating officer David Nagel said the change in RVs reflected the change in Wellington’s market fortunes after the Covid boom. “When these were last set, back in 2021, the market was obviously rising very quickly, buoyed by record low interest rates. It then experienced some steep declines in 2022, influenced by higher interest rates and tighter credit conditions, as well as a higher rate of inflation and unemployment,” he said.
“Now, these latest rating valuations for Wellington City are reflective of a market that is still being affected by strong economic headwinds. Sales volumes have reduced, and sentiment has changed markedly from being a sellers’ market to being a buyers’ one.”
Property owners with newer and higher quality homes would also notice a smaller drop asthose properties held their values slightly better, Nagel said.
Valocity senior research analyst Wayne Shum said it came as no surprise that values had dropped.
However, he warned that the valuations were already five months old and did not include chattels so should not be relied on to make a decision on the property market today.
“If you are making a market decision today don’t use them.” People should instead do their own research such as using data tools for real-time estimates, getting an independent property valuation or talking with real estate agents on the ground, he said.
Valocity data showed the average house value now sat at $972,000 and had fluctuated over the last six months. The current average value was $5000 more than three months ago, but $16,000 less than six months ago.
Research by OneRoof and its data partner Valocity previously highlighted which parts of the city would be hit hardest by the new RVs.
Wellington’s average property value fell 20% between September 2021 and September 2024, while sales data shows homes in the capital consistently traded for well below their RV in 2024.
Wellington’s housing market has been hit hard by the downturn, and the drop in values has been reflected in the new RVs. Photo / Getty Images
A case in point is a property in Oriental Bay whose RV rose from $3.56m to $5.4m in 2021, but which sold in March this year for just $4.5m.
OneRoof’s analysis of property values in the capital’s suburbs between the two valuation dates found steep falls in all but one suburb. Glenside’s average property value dropped only 5% between the two dates, from $878,000 to $833,000.
The next smallest drop was in Te Aro, where the average property fell 14%, from $823,000 to $710,000.
The analysis of suburbs with 10 or more settled property sales in the last 12 months found 25 suburbs where the average property value dropped 20% or more. The largest drop was in Pipitea. Its average property value fell 29%, from $839,000 to $599,000.
The biggest drop in dollars was in the city’s most expensive suburb. Oriental Bay’s average property value fell almost $600,000 between the two valuation dates, from $2.72m to $2.12m.
The latest OneRoof house price figures suggest Wellington’s housing market has turned the corner, with Wellington City average property value recording value growth of more than 2% in the last three months.
OneRoof talked to several Wellington agents about the RVs at the end of last year. They reported that some homeowners, already angry about the rise in the cost of living and council spending, would challenge the council if their RV fell but their rates bill didn’t.
Charles Morley-Hall, principal of Just Paterson, said RVs were not reflective of the market value of properties. “Ultimately, it’s not a measure of the market valuation of a property, it’s just a valuation for councils to tax off,” he told OneRoof in November.
When the rateable values were last set, they were so high some owners expected to receive more for their property than was realistic, but people soon learned the values were “completely out of kilter” with where the market was.
“Wellington agents have always needed to talk to owners and buyers about the relevance, or not, of rateable values.”
Morley-Hall told OneRoof people should remember they had the option to challenge their RV when it came out, and he thought more people would.
“I think in the past years perhaps only two or three percent of people have challenged their rateable values,” he said.
“I project that will be considerably higher this time around because people will believe that will affect their rates, bring their rates bill down, and, you know, in a cost of living crisis that’s quite a large part of people’s outgoings on a property.”
Grant Henderson, Wellington regional manager for Bayleys, also thought there would be more challenges. “Because, you know, if you’re going to sell your property at $1.2m yet you’re paying rates on something that’s got a $2m rates charge, it’s a bit on the nose, isn’t it?
“I would suggest it’s everybody’s right to push back.”
Wellington City Council manager of financial operations, Michael Nyamudeza, said a drop in property values did not mean ratepayers should expect a lower rates bill. He said it was important that property owners remembered that a change in the rating valuation of a property did not mean rates would change by a similar percentage and was instead a reallocation of the same amount
“... It (council) doesn’t collect more rates because values have increased, and it doesn’t collect less rates if values have decreased.”
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