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New property valuations show average increase of 60% in three years

News from WCC
New valuations for Wellington properties were released today. On average, the value of residential housing has increased 60.4% since 2018 with the average house value now sitting at $1,435,000, while the corresponding average land value has more than doubled to an average of $985,000.

The valuations can now be viewed online at www.qv.co.nz – type in your address to see the latest numbers.

The valuations have been prepared for 80,336 properties on behalf of the Wellington City Council by Quotable Value (QV). They show the total rateable value for the city is now $123,219,693,151 with the land value of those properties now valued at $79,045,542,201.

Rating valuations are usually carried out on all New Zealand properties every three years to help local councils set rates for the following three-year period. They reflect the likely selling price of a property at the effective revaluation date, which was 1 September 2021, and do not include chattels.

QV area manager Paul McCorry commented: “It will come as no surprise to anyone that the demand for residential housing in the Capital City has been extremely buoyant over the last three years. In 2018 we were exclaiming at the number of million-dollar suburbs in the city. In 2021 there is not a single location with an average value less than $1 million – in fact, Kelburn, Oriental Bay, Roseneath and Seatoun have now pushed over $2 million.

“A lot of the value increases have stemmed from pressure on land. The demand for vacant land has seen land values more than double in many suburbs. We have started to see developers looking to demolish modest houses on sections with development potential. Rapid intensification is the model. It is not exclusively a Wellington City problem, but one that is exacerbated by the physical constraints to urban sprawl.”

Meanwhile, commercial property values have increased by 36.1%, and property values in the industrial sector have increased by 60.6% since the city’s last rating valuation in 2018. Commercial and industrial land values have also increased by 52.2% and 73.1% respectively.

“The commercial sector continues to have the greatest potential for impact from COVID-19. Our discussions with landlords and tenants across the city shows the retail space has seen little rental growth – particularly from those that rely on hospitality or tourism. On the flipside, the office sector continues to show strength in the face of the pandemic. Appetite is really robust for A-grade, seismically strong office accommodation. The government employment in this space has really helped that resilience.”

Meanwhile, Mr McCorry said the industrial market has compared favourably to commercial on a national scale for some time now – a trend that has continued in Wellington City.

“There are now relatively low numbers of true industrial properties, aside from the northern corridor, but good quality industrial space is very sought after and contributing to value growth. Across the commercial and industrial sector, the demand for yield/return on investment continues.”

The average land value increase for commercially zoned land has been 52.2% since 2018, which Mr McCorry attributes to a change in use from commercial to residential.

“We have seen huge demand for redevelopment land on the city fringes. Areas such as Te Aro, Mount Cook and Newtown, where you are in walking distance to the CBD are ideal for apartment living, and developers have been purchasing under-utilised sites to satisfy that need. With current supply-chain issues it remains to be seen how quickly some of these proposed developments will come to the market.”

Since 2018, the average capital value of an improved lifestyle property has increased by 55.57% to $1,600,000, while the corresponding land value for a lifestyle property increased by 91.18% to $1,025,000.

“Lifestyle property makes up a modest part of the Wellington City market, with a little over 500 lifestyle properties predominantly in the Makara, Ohariu Valley and Horokiwi areas. Typically, lifestyle values align with high-end residential properties and this segment of the market has been buoyant,” Mr McCorry added.

He said there were limited true rural properties in the city with less than 40 properties in total. Of these the forestry sector had performed the strongest, up 69.2% in three years.

The effective rating revaluation date of 1 September 2021 has now passed and any changes in the market since then will not be included in the new rating valuations. In many cases, this means a sale price achieved in the market today may be different to the new rating valuation set as at 1 September 2021.

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. They are not designed to be used as market valuations for raising finance with banks or as insurance valuations.

New rating values will be posted to property owners after 8 December. If owners do not agree with their rating valuation, they have a right to object through the objection process before 29 January 2022.

The City Council’s Financial Strategy and Treasury Manager, Marty Read, said it was important that property owners remember that a change in the rateable capital value of a property does not mean rates will change by a similar percentage.

He said the Council uses property values to allocate the rates it needs to collect between all ratepayers – it doesn’t collect more rates just because capital values have increased and it doesn’t collect less rates if capital values have decreased.

The actual rates increase for each property will depend on a range of factors, including:

the Council’s overall rates ‘budget’ calculated each year in the Annual Plan.
the capital value change for your property compared to the average change
any change in the mix of services the Council provides
any change in targeted rates or the Council’s rating differential.

17 comments:

  1. Fleur Fitzsimons, 30. November 2021, 16:39

    This is not the Wellington I want or that people need. We have to build more homes urgently if we are to have any chance of keeping our teachers, nurses or cleaners in Wellington. [via twitter]

     
  2. Baz Marty, 30. November 2021, 17:09

    I’m sure we’re all looking forward to our new rates bill.

     
  3. Ray Chung, 30. November 2021, 18:34

    Fleur: None of the new houses that are being built are under $1 million! By building 6-10 storey buildings, they’re just going to get more expensive. The WCC needs to release new, cheaper land urgently.

     
  4. Claire, 30. November 2021, 20:59

    My land value has more than doubled. But my improvement value has dropped. Before, they were quite even.
    Ray is correct. Only Kainga Ora can build affordable homes. I don’t think councillors or MPS understand the complexity of the housing situation.

     
  5. pedge, 1. December 2021, 7:56

    We are never going to get rich as a country while we have an economy largely based on buying and selling houses from each other. No wonder we have one of the lowest productivity rates in the developed world.

     
  6. Salty, 1. December 2021, 9:54

    Congratulations to all Wellington homeowners! You’ve all worked so hard for this.

     
  7. Amacf, 1. December 2021, 10:19

    Our land value has gone up so much and the improvement value has gone down so much that the logical decision is to demolish our restored and updated late Victorian villa and build multiple three storey units. QV’s valuation formula is heavily weighted to land while trying to remain just below current market clearing prices.

     
  8. K, 1. December 2021, 10:29

    Ray Chung: “None of the new houses that are being built are under $1 million!” This is not true. Plenty of new dwellings are being built in Wellington that are selling for far less than $1 million. And you can get two dwellings in some of the new developments for just slightly more than $1 million in places. Here is an example of cheap affordable housing in Newtown from a new development: and here is an example of a new townhouse style development in Central Wellington with 2 units for a little over $1 million.

     
  9. K, 1. December 2021, 10:34

    Claire: “Only Kainga Ora can build affordable homes.” Untrue. If there is the land available already owned, it is easy to build a 2 bedroom unit in Wellington for under $300k, providing of course the council grants consent, which is the hard part, and what all the proposed and enacted reforms are striving to make a whole lot easier.

     
  10. Claire, 1. December 2021, 11:42

    K: Auckland has been building flat out for years, with no drop in prices. Why is that?

     
  11. pedge, 1. December 2021, 11:56

    K. I doubt you are going to convince anyone with those two examples. Some of the worst new builds in the city. The Paddington ones are especially bad; totally inappropriate having low density on that site. Should be commercial ground floor. They are tiny apartments. Terribly designed. Everyone involved in that development should hang their heads in shame!

     
  12. K, 1. December 2021, 13:06

    Claire: Auckland suffers from the same issue as Wellington – restrictive zoning that hampers the ability to build denser dwellings in the inner suburbs, and the bulk of new greenfield developments being giant houses is targeted at the high end.

    Pledge: Your comments are subjective. Many will look at both of the new developments I linked to as heaven. Brand new homes built to the latest building code offering a dry & warm home at a reasonable price. Just because you don’t like small homes, it doesn’t stop someone struggling to get on the ladder seeing them as attractive options. Our first property was a 39sqm apartment and we lived there happily for 8 years – fantastic lifestyle.

     
  13. nemo, 1. December 2021, 14:54

    K and Pedge. If you’re really interested to see what should have happened on the Paddington site, instead of the abomination that they have built there now, check this out (scroll down to the last image for some positive growth imagery…)

     
  14. Claire, 2. December 2021, 11:05

    Back to new valuations: we need a full explanation. I have heard of someone who had had improvements drop to $10,000. Only the cost of a shed. What is going on?

     
  15. D'Esterre, 3. December 2021, 15:18

    Claire, the household member who used to work for a local authority says that there’s neither rhyme nor reason to any of this. The value of improvements hasn’t been close to reality for a very long time. QV will have done this everywhere in NZ: the above article indicates that it reflects the differential value of land.

    K: “….it is easy to build a 2 bedroom unit in Wellington for under $300k…” The above household member considers this claim to be optimistic. In their view, it hasn’t been possible to build here for that sort of price for at least a decade, possibly longer. It may once have been possible with kitset-style houses, but not in the current environment, with the price of building supplies so volatile that one cannot even get a fixed-price quote for a building project. It’s important to remember that, even with the reforms announced by the government, consents will still be required. And much of Wellington is – to put it mildly – challenging as to ground conditions, which adds to the build cost. Important also to remember that houses built in one’s backyard cannot be sold as separate properties unless they have separate title. Which requires resource consent for a subdivision. In our view, whoever came up with the proposed building reforms hadn’t thought the issues through.

    Pedge: I’m familiar with the “shoebox” apartments of the Auckland CBD. Apartments of that sort aren’t suitable for families: they’re just barely OK for a couple. We have first-hand experience of this. They’re OK for young (or older) singles, though, as a stepping stone to something larger.

     
  16. Ray Chung, 4. December 2021, 0:38

    K; I stand corrected. I’ve asked the agent if I can inspect these units and I wonder whether they are the 45 square metre houses that I read about? I don’t know if the banks have changed their policy but they previously wouldn’t loan on dwellings smaller than 50 square metres. Once I’ve seen these, I’ll come back to you with further comment. You said there are many of these, would you give me some more examples so I can check them too.

     
  17. Ray Chung, 5. December 2021, 14:18

    K; I hope you bought one of these units in Newtown as they all sold off the plans and some are now up for resale at a profit and they won’t even be completed until next year! This is certainly an easy way to make a few bob very swiftly where you just need to pay a deposit! The two-unit places in Taranaki Street that you refer to are not really two units but what they call two-key where there’s an adjoining door with bathroom on each side and two entrances.