Dunedin homeowners who witnessed wild swings in the estimated value of the capital improvements on their property contacted the Otago Daily Times last week after Dunedin City Council ratings valuations began landing in mailboxes earlier this month.
Homeowners reported capital improvement values significantly down and land values significantly up.
An Elgin Rd, Mornington, resident sent the ODT his QV letter that showed the value of improvements at his property had dropped to only $65,000.
The land value had jumped to $430,000, and the total value was $495,000.
His previous valuation stated the improvements were valued at $180,000, land value $200,000 and the total $380,000.
Seemingly, the value of the improvements on the land dropped by 64%, while his land value increased by 115%.
In Marlow St, St Kilda, another correspondent received a valuation that said the value of his improvements was now only $10,000, down from $240,000 in the previous valuation.
Meanwhile, his land value had skyrocketed to about 250% its previous value.
Others reported the same.
QV national revaluation manager Tim Gibson said land values and capital values were assessed "thoroughly" but "independently" of each other.
The difference between those two values was then considered the value of capital improvements at a property, he said.
As land values had been increasing at a significantly higher rate than capital values, the value of improvements, such as houses, outbuildings, or landscaping, accordingly dropped.
"What we’ve witnessed over the past few years - and the Office of the Valuer General [OVG] has independently verified this - is a significant increase in land values locally, driven primarily by developers’ demand for higher-density land," Mr Gibson said.
"It’s a common occurrence for developers to therefore make way for residential development under variation 2 of the second generation plan by demolishing existing dwellings.
"In other words, land values have risen at a much greater rate, because many buyers haven’t been purchasing these properties for the houses, but for the land beneath them."
Mr Gibson said it was not uncommon for the added value of capital improvements to diminish.
He gave as a "prime example" Factory Rd, in Mosgiel, where there had been significant residential development in this style, he said.
All rating valuations were independently audited by the OVG to meet strict quality standards before the new rating valuations were certified, he said.
Nevertheless, if property owners did not agree with their rating valuation, they had a right to object before March 16.
QV was New Zealand’s largest valuation service provider, working with more than 85% of councils across the country.
The objection rate was about 1.5% both nationally and in Dunedin, he said.
At the end of last year, the council said its ratings valuations had been delayed due to a range of factors.
However Dunedin property owners were to be notified of their new values this month, "and can be reassured that valuations will be accurate as of the effective revaluation date of July [last year]."
The council website also said council rating valuations were only one factor in determining an individual’s rates.
The total rates revenue required each year was set through the council’s annual planning process.
This total requirement was then spread across ratepayers using fixed charges as well as the value of a property.
Last week a council spokesman said the council had "no concerns" about the results.
The council had received a small number of calls, which was normal, he said.
