Hamilton house prices ignore values
Valuations often miss their mark when it comes to sales, reports Daniel Adams.
Don't bank on that new council valuation if you are selling your house.
A Waikato Times' analysis of 100 Hamilton house sales immediately after the latest revaluation showed that many sold for tens of thousands below the new estimates, and one home went for more than $100,000 above.
And although almost half of the sales were within 5 per cent of the new valuations, experts say the gap is likely to grow, and the "point in time" values become increasingly irrelevant.
Quotable Value - which independently revalued Hamilton's 55,000 properties - is confident its values are largely close to the market, but it says that property valuation is not a science and the values are subjective.
Lodge Real Estate managing director Jeremy O'Rourke said vendors or buyers expecting the latest council valuations - known as rateable values - to be a guide for market price could find themselves way off the money.
"Rateable value is a very good tool for distributing rates across the city but it's not an accurate tool for predicting the selling price of your property."
Some suburbs show huge variation in sale price measured against the new valuations - recent house sales in Dinsdale range from $60,000, or 22 per cent under rateable value to $25,000 - more than 13 per cent - above.
The Rating Valuations Act 1998 requires councils to revalue properties at least once every three years, with Hamilton's latest dated September 1.
Quotable Value regional operations manager Richard Allen said its "mass appraisal" was a complex process, which drew on sales data from January through to September to identify market movements in each category.
That was used to identify price trends by property category, location and a range of other measures, which were then applied to all city properties.
"Every property is unique, and sits within its own niche, and we have to identify what the trends are in each and apply them across the category."
The valuations did not assess the value of chattels, as a registered valuation did, but he said most valuations should be close to sale price.
The company had conducted kerbside inspections of close to a quarter of the city's residential properties to help it arrive at the latest valuations.
"They should be pretty close. We're at a specific point of time, if they come along in December and the market's moved, you'd expect the valuation to be different. But it involves a number of subjective judgements," he said.
"If you asked five different registered valuations on the same date, you'd get variations between all of them. But our values should be pretty close."
Council revenue manager John Gibson said the city was obliged by law to include capital value on its valuations - despite general rates being levied according to land value - and also, some targeted rates are based on CV.
Mr O'Rourke said the sales data was not a slight on the new valuations.
"Quotable Value do a great job in assessing - in Hamilton probably 45,000 to 50,000 homes - they're not going to individually assess all of them and make a detailed analysis of each, they're going to use their own formulae."
The sales data shows newer suburbs generally closely aligned with rateable valuation, although in every area there have been anomalies, he said.
"When you've got a new suburb, it's relatively easy to determine what the value of the land is, to apply a build cost or a square metreage rate, and therefore you're likely to get some consistency with the valuations.
"You will still get sales price anomalies in those areas when something is architecturally just inspired, and someone pays a premium," he said.
However older suburbs were more likely to vary from rateable value.
"In Hamilton East, say, you might have a villa that's been completely redone, same size as the one next door that's never been refurbished; they can have a similar CV because that can't be accounted for," Mr O'Rourke said.
Mr Gibson said 450 objections to the latest valuations had been received.