Agents claim tens of thousands of Auckland homes have been overvalued, All things property, under OneRoof

– Auckland’s new property valuations show a 9% drop, but agents say many CVs are too high.

– Watercare’s restrictions were not factored in, affecting market values in development zones like Ōtara.

– Council warns CVs shouldn’t guide house prices, but agents say they impact sale expectations and prices.

Tens of thousands of Auckland properties have been hit with potentially misleading CVs, real estate agents have told OneRoof.

Auckland Council released its new property valuations this week, announcing there had been a 9% drop in CVs across the city.

However, real estate experts are sounding the alarm on CVs they claim are hundreds of thousands of dollars too high.

Agents contacted by OneRoof this week said the new CVs do reflect the water and wastewater capacity restrictions that have halted developments around the city and significantly impacted some property values.

Auckland Council confirmed this week that the property valuations were carried out before Watercare introduced its 10-year restrictions on new build sites.

Agents said that thousands of properties in development zones had been affected by the restrictions, including homes in Beach Haven, Ōtara, Papatoetoe, and Warkworth.

They believe the new CVs for these homes do reflect the drop in market value caused by the restrictions.

The council has stressed that the new CVs should not be used as a guide to house prices. “Rating valuations allow rates to be fairly shared. Council valuations do not accurately reflect a property’s current market value and should not be used for insurance or mortgage purposes.”

Harcourts JK owner David Findlay said CVs couldn’t be ignored. Photo / Supplied

However, Harcourts JK Realty business owner David Findlay said the new CVs would have an impact on expectations and prices, noting that many homes in the city were overvalued.

“It is going to set some wrong expectations, and that’s going to be pretty hard for a lot of people to swallow,” he told OneRoof.

“Council says this shouldn’t be a representation of a property’s value, but no matter how many times you say this, it does affect the sale price of the property. A lot of sellers don’t actually engage with good real estate agents anymore because there’s so much information online, and a lot of the online automated valuations do take CVs into account, and that’s where it’s going to hurt.”

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Ray White Manukau co-owner Tom Rawson said selling for around CV would be difficult for homeowners in areas affected by the water constraints.

“You could go through all of those suburbs where the water is constrained and the CVs will be way off because you’ve taken out a massive buyer pool.”

His agency is selling a property in Ōtara that had seen its CV fall $20,000 to $880,000, but because the water constraints had not been factored in, the actual market value of the home was closer to $770,000.

Rawson said it was very confusing for the owner. “I’ve said to the owner that developers would not be able to develop your property until 2035-2040; therefore, the price you are asking for is going to be too high.”

Ray White Manukau co-owner Tom Rawson said the CV for properties in areas facing water constraints will still be “way off”. Photo / Supplied

Harcourts agent Harsh Kathuria was surprised the new CVs hadn’t factored in the water constraints. “People will have to pay very high rates for a piece of land that is not worth much now.”

He noted that many sellers and buyers in the city still used CVs as their benchmark. “Higher CVs don’t mean you are going to get more money from the market. You can have a CV that’s $200,000 higher, but you can’t tell someone to pay you $200,000 more because you have a high CV. Yes, it’s a good benchmark, but it’s not a reflection of price.”

Harcourts agent Alex Dunn said the new CVs would be confusing for buyers because a lot had happened since they were taken, more than a year ago.

“I’ve had a few properties where the CV has gone down drastically for whatever reason, and then I’ve had other properties where they’ve gone up and some that have stayed the same – it’s all over the place.”

However, he did not expect homeowners with inflated CVs to do anything about it. “If they know there’s something like that (constraints), they will probably just say nothing. That’s what I’d be doing – unless they think there’s a significant sale close to them that will increase their CV.”

Auckland developer Craig Alexander said he ignored the CVs for his properties and had no plans to object. He believed it was based on an antiquated act done solely for rating purposes and said the council should set the rates based on a different system.

“If people understand that it’s only for setting rates and has nothing to do with market value, then fine, but I don’t think the average consumer understands it to that extent.”

Auckland Council’s Chief Financial Officer Ross Tucker responded to the agent claims, saying: “The rating valuations are a point-in-time assessment as at 1 May 2024. [CVs] are prepared using a mass appraisal approach for the purpose of fairly sharing rates and are not intended to represent an accurate estimate of what a property might sell for today.

“They do not take into account information that may have moved the market since 1 May 2024, including Watercare’s announcement in November 2024 on network capacity in Auckland.

“When considering the objection process, property owners should consider whether there is evidence that their CV does not reflect their property’s value at 1 May 2024.”

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