Establishing the value of your home is a tricky exercise. First consider the two definitions of value that feature in the real estate lexicon: Rateable value (RV) and market value.
- RV (sometimes called government valuation, or GV) is set by the local council and used to calculate rates paid each year by the homeowner
- Market value is the probable price a home could sell for at a point in time, based on recent past sales of similar properties in the location, and myriad other variables, such as housing supply, buyer confidence, interest rates, and economic outlook
Understanding rateable value
It’s worthwhile taking the time to understand RV because it includes house sales data from a set point in time.
The Auckland Council last updated property valuations in 2021, which saw a 3.5% lift in rates from March this year.
Council valuations are based on three elements:
- Capital Value (CV) – based on comparable sales in the area
- Land Value (LV) – based on recent sales of vacant sections in the area
- Value of Improvements – The difference CV and LV. Improvements include things like new services, driveway access, and other consented work
Critically, RV does not consider improvements or changes that didn’t require a consent from the council. These could include redecoration, bathroom renovations, a new kitchen, furnishings, and the like. This is one of the main reasons why the RV figure is not indicative of current market value.
Establishing market value is a more qualitative exercise, simply because there are more factors, many ethereal in nature, that determine a sale price – from broad economic measures including interest rates and consumer confidence to more localised influences, such as housing supply, buyer demand, and school zones, among many others.
Calculating the market value of your home
You’ve got to do your research. Start by digging up the sale price of homes recently sold in your neighbourhood. There are several online platforms that offer this data.
Better still, talk to one of the team at Goodwins. We’ve got our finger on the pulse and will have a good sense of housing supply and demand, what’s hot, and the likely price range of homes selling in your area.
You could also engage a registered valuer. For a fee you will receive an independent valuation that provides a more robust indication of market value, factoring in considerations such as building methods, district plans, and government legislation.
In the end, the truest indication of your property’s value is the amount a buyer is prepared to pay. The sale price may delight, disappoint, or simply land about where you expected it to. Whichever the case, the sales process will be less taxing when you start with realistic expectations.