The towns where you'd need to pay 40% above CV

Whanganui has the highest sale price to rating valuation ratio in the country, new research from OneRoof shows.

OneRoof and its data partner Valocity looked at the median sale price of New Zealand's territorial authorities and compared them to the median RV to see which locations were locations were climbing in value and which ones were falling behind.

Properties in locations where the RV is due to be updated this year, including Whanganui, generally had a higher sale price to RV ratio compared to those that were issued with new valuations last year.

READ MORE: Find out how your suburb compares to the rest of NZ

But the figures also show the full extent of the property boom in some of New Zealand's regional housing markets.

OneRoof found that houses in Whanganui typically sell 1.55 times the RV. The town has seen its median property value rise 52.6 percent in the last three years to $265,000.

Hastings, where valuations were last issued in 2016, had the next highest sale price to RV ratio, with properties there typically selling 1.44 times the rating valuation.

The city also enjoyed the biggest annual leap in median values, to $500,000, and seen property prices leap more 70 percent in the last three years. New valuations, due out now, will likely reflect this increase in prices.

Values are re-worked by valuers every three years. The dates vary with each council, so the closer these valuation dates are to the present time, the closer they are to current market sales figures.

There are exceptions.

Christchurch and Auckland were the only parts of the country where houses typically sold at or below RV.

The sale price to RV ratio for all dwellings in Auckland is 0.98, a climb-down from when sale prices averaged 22 percent over RV in 2017, the year before the latest valuations were issued. However, not all property types have been affected by slowdown; apartments, flats and lifestyle blocks seem to be more resilient to changes, sporting a higher sale price to RV ratio than houses.

The next round of RVs for the city come into effect next year, and it will be interesting to see how those figures reflect the challenges currently in the city's property market.

The other notable exception was Christchurch, where the sale price to RV ratio is 1.01 and has been since the last valuations were issued, in 2016. The figures reflect the flat market conditions in the city.

Homeowners in Tauranga were issued new RVs last year, so the low sale price to RV ratio of 1.02 is to be expected although a slowdown in house price growth in the city may be a factor. Properties in Whangarei, Hamilton and Wellington were given new RVs last year and sale prices haven't moved much since.

Powering ahead

Rotorua sales prices are still powering ahead and are a good 25 percent above the 2017 RV, while homes in Queenstown are typically selling 1.11 times the 2017 RV.

Dunedin homeowners are due to get new RVs next month and it will be interesting to see how much the new valuations reflect the city's booming property market. Buyers can typically expect to pay 1.44 times the RV, one of the highest ratios in the country.

Aidan Young, of Axia Property Valuers, says that like other cities, Dunedin is undergoing intensification closer into the centre of so sites with potential for development are more sought after, especially once the new second generation city plan becomes operative.

“The plan is not operative yet, but it is effectively changing the highest and best use of properties,” he says. “And there’s just no stock on the market, not enough property.”

Dunedin real estate agent and developer Joe Nidd says that the city’s topography, ringed by hills with few opportunities for greenfield development, means that some properties were “under-valued and under used”, and hence commanding premiums well over RV. He predicts this will continue for some years, particularly as previously un-appreciated parts of the city become very attractive, so RVs maybe way behind future prices.

Travers Smyth, an agent for Harcourts Birkenhead, in Auckland, says both buyers and sellers will quote the RV when it suits them, "but if you want a non-biased idea on a price, then pay for a registered valuation”.

In denial

Smyth says sellers should focus less on the RV and more on realistically calculating what they bought for, and what the market is telling them the property is worth now.

“Buyers always hope they’ll get a deal,” he says. “But they do have a rough idea of what’s realistic.”

Jelena Freeman, of Premium Takapuna, also in Auckland, agrees. “Sales in the last three or four months don’t lie, you just look at the comps and what’s on offer,” she says.

“Deep down people do know this, but they’ll be in denial.”