- Homeowners face potential drops in their RV next year as a result of the recent market downturn.
- Seventeen districts, including Ōpōtiki and Gore, are due to assess new RVs in 2025.
- Agents say RVs have become increasingly irrelevant and urge buyers not to use them to make judgements on price.
New Zealand homeowners already grappling with double-digit council rate rises are warned to brace for drops in their RVs next year as a “softening” market likely takes hold.
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Seventeen districts are due for new rateable values in 2025. These include Opotiki, Gore and Buller, which experienced a 61%, 59%, and 55% increase respectively in their rateable values in 2022 compared to 2019.
A rateable value is a three-yearly assessment of a property’s value, used by local authorities to help determine and allocate rates. On average, the rates for the 17 districts rose by 15% for the 2024/25 year but for places such as Gore, the rates rocketed by 21.4%.
Quotable Value operations manager James Wilson said the 2021-2022 property boom had been partly driven by certain property types, such as those able to be subdivided, but the cost of building had since gone up. While homes were still selling “there might be some medium family homes not selling at the premium they might have gone for”.
“We can’t say every property in the district will come back, there’s certainly been a lot of performance variation across districts. That being said, RVs done in early 2022 when the market was really hot, you expect we will see properties in this area soften.”
Wilson said there was a misconception that values “go on dollar for dollar” of a rates bill but the truth was they made up “only a very small component” of property rates.
Despite this, he empathized with homeowners.
“You do feel ripped off as a homeowner when your home asset is softening and you’re being asked to pay more.”
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Gore District Council chief executive Debbie Lascelles said that while rateable values helped councils make decisions, rates increases did not necessarily align with property value fluctuations.
“The total rates required is adopted in the annual or long-term plan and then divided by the values of the properties in its district to find out the share to be paid by each property,” she said.
“Those with lower property values pay less than those with higher property values. So, if the district as a whole drops in value, then there will be no change to rates at all. If values change disproportionately, with some properties going up and some going down, then there is a shift in the proportion of rates that those properties are responsible for.”
QV operations manager James Wilson: “We can’t say every property in the district will come back." Photo / Fiona Goodall
Lascelles said fixed charges were also included in a person’s rates.
In Ōpōtiki, where rates were going up by 10.5%, Harcourts principal Wendy Moore said she avoided using rateable values to appraise properties. “In this town, there are elevated areas and then smaller rental investments in town. You can’t compare apples with oranges,” she said.
“People ask how much above or below things are selling for but it’s not as simple as that. There are different sectors of the market.”
Moore said people put too much emphasis on rateable values when the focus should be on the merit of a property itself.
Like Wilson, Moore found many people linked values to rates.
“That would be the main discussion about rateable values, that their rates are going to go up too much or they could go down if there’s a drop but the rates calculations are far more complex to be driven by values alone.”
Gore is due to issue new RVs to homeowners in 2025. Photo / Tony Wall
Gore First National owner Graham Maxwell said, in his view, rateable values were “irrelevant”.
“We have had high rateable values but the market still came back by 10% in Gore. Did it impact it? No. So a softening of RVs is not going to impact sale value.”
In 2022, Gore’s average rateable value was $403,000 – a massive 59% increase compared to 2019.
Maxwell said he used comparable sales rather than rateable values which he felt were more accurate.
He said he was not concerned about the anticipated drop next year, as he believed the market was more affordable now compared to two years ago. “There are options right now for people,” he said.
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