Auckland homeowners, try not to freak out about your new CV
First of all, if it makes you feel any better, the CV of my itty-bitty first home is down by a third. Have I shat my pants? No. Am I crying? Also no. I do feel a little less flash, but I always knew that me being anything other than a scrappy gremlin was an illusion. I could say something lovely and heartwarming about it still being a home where my heart is, but I am not that stupid. I know what property is in this country, and particularly in this city – for those lucky enough to have it, it's likely our biggest financial investment. I for one cannot count my 1998 Toyota Corolla as a comparable asset and I am counting on one day cashing in my house to move somewhere nice and small by the seaside.
So why am I not freaking out about a loss that on paper, looks like almost a decade of saving every cent from a full-time job? Let's start at the beginning.
Where is my CV?
You can check your CV (and your neighbours' CVs, your friends' CVs, etc) online here. On average, residential CVs have dropped by 9% across Auckland, though this varies from suburb to suburb – Aotea Great Barrier Island has seen huge increases and suburbs near the central city are generally where drops are.
What even is a CV?
CV stands for capital value. It's assessed by independent valuation providers who work closely with the council. It's an estimate of what a property would have sold for at a certain date, based on property market trends and recent sales activity. Every three years, property values are assessed. In the case of the CVs which have come out today, that date is May 1, 2024 (they have been delayed by months and months).
Why have CVs dropped?
The CVs that have just been swept away like old cobwebs were based on data from June 1, 2021 – very near the property market peak. There were record low interest rates for mortgages and lots of pressure in the market. It should be no surprise to anyone that since then the economy and the property market have, erm, not improved.
During Monday's media briefing, Auckland Council chief economist Gary Blick said that the previous two valuations had been taken at markedly different stages of the economic cycle compared to the latest, which has been taken at a time of high mortgage interest rates and a cool property market. ' The recent economic cycle – with its unusually steep climb and fall – helps explain why some properties have had swings between the two rating valuations,' he said.
How are CVs calculated?
Today, the CVs for 630,000 properties were released. That is far too many to calculate one by one. Instead, standard methods are used to calculate many properties at once. Valuers look at the sale prices of similar properties in the same area then apply this data like a blanket. For example, the CVs of renovated villas in Grey Lynn will be aligned with the sales of renovated villas in Grey Lynn. It means that the changes in your CV are likely similar to your neighbours', though it will vary between different types of homes like standalone houses, cross-leases or units.
How will this affect my rates?
It really depends. Already the council has approved an overall average rates increase of 5.8% for residential ratepayers. The annual rates for a property with a CV of $1.29 million will be $4,069 for 2025/2026. The increase equates to paying $223 more for the year. But this will differ if the decrease or increase in your property CV is more or less than other properties in the region. If your CV has reduced more than the average you will have a smaller rates increase (a silver lining!). If it has held up better than the average, your increase will be bigger.
I swear my evaluation is wrong!
You certainly won't be the only person thinking this. CV reevaluations tend to trigger worries no matter what the change. On the one hand, people don't want the value of their property to drop. On the other, they also don't want to pay more rates. After the last evaluation in 2021, more than 9,000 objections were made to the council. Objections can be made online, and you will likely have six weeks to object. Once you've filed your objection a valuer will assess your property – the CV could go up, down, or stay the same.
So why shouldn't I freak out?
Like any other market, Auckland's housing market will have dips and slides in response to the economy, policy settings and market shifts. CVs will reflect this. If we look back only three years, yes, there's a decline. But if we zoom way out, we see that the trend goes the other way – up, up and up.
If you had stocks in a company, and suddenly there was a paper loss, freaking out would not be the thing to do. Instead, you hold onto your stocks and wait. So unless you need to sell your house tomorrow for cold hard cash (and not to buy another house with a CV that has also gone down), then the best thing to do is nothing. Have a look around your lovely little house. How nicely the curtains match with the cushions! The roof is still over your head, you're still one of the lucky ones. You haven't lost anything at all.
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