Property's time of reckoning

Tens of thousands of Hamiltonians will soon learn how the value of their biggest asset has fared during three years of property market doldrums.

Experts are tipping that the city's residential property will emerge from the triennial property revaluation unscathed compared with other sectors.

But commercial and industrial property portfolios could be set for worse news, with industry figures tipping that land values for vacant buildings in the central city, and even elsewhere could fall by as much as 30 per cent.

Valuers are already at work revaluing 55,000 Hamilton properties for the first time since 2009, although the city's ratepayers will have to wait until the end of October to discover their verdict on their real estate's worth.

Ninety per cent of properties in the city are residential.

Lugton's Real Estate director David Lugton said he wasn't expecting significant movement for residential valuations but warned that in parts of the central city he expected land values could drop by 20 to 30 per cent.

The valuations directly affect the rates charged on a property. However the city's total rates take does not increase as a result of the revaluation.

Land values that have increased above the average increase for that type of property will pay more rates for the next year than last year, and those with a lower-than-average increase less. Overall the city's rates take is already scheduled to climb by 3.8 per cent next year.

City council revenue manager John Gibson said that though a ratepayer whose property increased in value by less than the average across the city for that type could expect a decrease in rates, some of those relative gains would be lost through planned increases in the city's overall rates take.

However, those ratepayers whose property fared better than average, while paying more rates, would have an asset with a higher valuation.

The valuations, although effective from September 1, will not have effect for rating purposes until July 2013, so will not influence this year's rates.

Commercial and industrial realtor Colin Jones said this year's revaluation would be "even less relevant" for that sector because of the dearth of sales.

That undermined the validity of the valuations, which were based largely on comparable property sales, although they also captured lease values.

Mr Lugton said by comparison residential sales volumes would bolster the valuers' work, with 250 homes per month now selling compared with only about 150 two years ago, and 350 a month at the peak of the market.

Both buyers and banks took notice of the valuations, with the market quickly assessing their relevance, though that waned as time passed.

Mr Jones said that while five years ago the city had only two to three years' supply of industrial and commercial land, it now had more than 40 years'.

He said there had been big falls in the sector's values over the past two years, with prices for vacant properties down as much as 50 per cent.

Central city office vacancies decreased by 1.6 per cent in the six months to December and total net uptake of office space rose by 3600 square metres. Commercial property managers last week told the Waikato Times that rates needed to drop and buildings be upgraded to ignite market interest.

Ratepayers will find out their property's new rateable valuation in late October, and then have a limited period to challenge the valuation.

The valuation will comprise land value - on which rates are based - and capital value, which is the land value plus the value of any improvements such as houses.

The mass appraisal is largely based on sales for comparable locations and properties, with only a small percentage of properties visited by valuers.


2000-2012 All values capital value, definition in article

2000-2003 Residential average increase 15% to $193,500

2003-2006 Residential average increase 64% to $327,000

2006-2009 Residential average increase 1.17% to $334,520

2009-2012 ?

Waikato Times