6 November 2018

Palmerston North City residential sector sees strong value growth

The Palmerston North City Rating Revaluation for 2018 is now confirmed and property owners will soon receive a 2018 Notice of Rating Valuation with an updated rating value for their property.

The new rating valuations have been prepared for 33,340 properties on behalf of the Palmerston North City Council by Quotable Value (QV).

Rating valuations are carried out on all properties in New Zealand, usually once every three years to specifically help local councils set rates for the following three year period. Rating values are just one of a number of factors councils use to allocate rates. Council rates will not be based on the new 2018 rating valuations until 1 July 2019.

The updated rating valuations should reflect the likely selling price of a property at the effective revaluation date, which was 1 September 2018, but do not include chattels.

The rating revaluation figures compiled by QV show the total ratable value of the 33,340 properties within Palmerston North City Council is now $19.5 billion with the land value of those properties now valued at $10.0 billion.

QV Property Consultant, Simon Willocks said, “There is strong demand for residential property throughout the city, with values increasing significantly since the last revaluation three years ago. Housing at the lower end of the market have experienced a larger percentage of value growth compared the overall average increase of 36% on Capital Values since the 2015 rating revaluation. Residential land value increases have driven much of the value growth across the City, with section prices at unprecedented levels. Land values have increased on average 68%, with lower land values doubling, and high land values increasing by about 40%.”

Commercial and Industrial properties have also seen value increases, with the average capital value for developed commercial property increasing by 17.5% since the last rating revaluation in 2015, and the average capital value for developed industrial property increasing by 23.9% over the past three years.”

“Lifestyle properties have also seen value increases since 2015. The average Capital Value for lifestyle properties has increased 24% to $695,000, with the corresponding average land value increasing by 40% to $350,000.”

Simon Willocks added, “The rural market has been more subdued with a 10% gain in value, with the locality underpinning already strong values.”

The Palmerston North City Council will use the new values as the base for setting rates from 1 July 2019. Council’s Strategy Manager – Finance, Steve Paterson says Council staff are currently reviewing the new values to assess the impact on rates for individual properties.

“It is important to realise that the changes to values does not increase or decrease the total rates revenue for the Council”, says Mr Paterson. “Instead, rates will be spread amongst ratepayers in slightly different proportions than before.”

“Because residential land values have increased at a faster rate than other sectors, residential properties will pay a larger share of the total rates than at present, when the new land values are used as the base for the rates calculations for 2019/20.”

“Early indications are that if the new land values had been used to calculate the current years rates, residential rates would have been between $140 and $250 higher than at present for many and up to $500 more for some.”

Further information on how Palmerston North City residential property values compare to other districts and to all of New Zealand can be found at www.qv.co.nz/property-trends/residential-house-values.

It is helpful to remember the effective rating revaluation date of 1 September 2018 has passed and any changes in the market since then won’t be included in the new rating valuations.

This means in many cases a sale price achieved in the market today may be different to the new rating valuation set as at 1 September 2018 and that rating valuations are not designed to be used as market valuations for raising finance with banks or as insurance valuations.

The updated rating valuations are independently audited by the Office of the Valuer General, and meet rigorous quality standards before the new rating valuations are certified.

New rating values will be posted to property owners after 7 November 2018. If owners do not agree with the rating value they have the right to object.

The objection close-off date is 13 December 2018.

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