Frank Newman: Valuations and statistics

A few months ago I reviewed two websites that had made finding property data whole lot easier: Trademe Property Insights (trademe.co.nz/property/insights) and Homes.co.nz.

Both apply a secret algorithm, to arrive at a suggested market value for residential properties, and provide a range of information about the property. They take what's called a desk top valuation approach - they look at recent sales in the area and compare the actual selling price of each property against its most recent capital value (as shown in the rates notice). They then apply that percentage change across all properties in the area to arrive at an estimated market value. No property inspection is carried out so the approach is inherently flawed. Both sites are upfront about these limitations and point it out in various disclaimers.

Frank Newman: Rateable valuations

Within the next few weeks property owners will be receiving their new rateable valuations in the mail. It’s an exercise carried out by Quotable Value (QV) that happens in the Whangarei district every three years, solely for the purposes of establishing how much you pay in rates, relative to other property owners in the district.

Relative is the key word because it’s the local politicians that set the total amount of rates collected, but it’s the valuation that determines how much of that burden falls upon each individual property owner. Here’s a simple example to explain.