Dunedin City Council financial controller Maree Clark said a decrease in rating valuation did not mean rates would go down.
A rates decrease would depend "on many factors", including how other properties fared, the overall value of Dunedin property, and any projects the council decided to continue with or to defer, she said.
The three-yearly revaluations of 54,313 property types in Dunedin put their total value at $20.02 billion, up from the 2007 valuation of $19.9 billion.
The majority of assessments, 45,183, were for residential properties, which recorded an overall decline of 5.9%.
The average house value declined from $295,500 in 2007 to $277,700 this year.
Residential localities recording the biggest change since 2007 include Ravensbourne/West Harbour (-12.9%), Wakari, Kaikorai and Helensburgh (-9.4%) and Pine Hill (-9.1%).
Except for those in the central city, almost all residential properties recorded reductions.
Central City North (+2.8%), Waikouaiti rural (+2.4%) and Waverley (+0.2%) bucked the trend with small increases.
The commercial and industrial property market is similar to that of 2007, with commercial recording a 0.3% decrease and industrial a 4.3% increase in value.
The biggest change in Dunedin is for dairy properties, which increased 16%.
The average lifestyle block is now worth $554,000, a decrease of 5.9% compared with three years ago.
The rating valuations, which date from July 1, were carried out by Quotable Value on behalf of the Dunedin City Council.
Valuations for Central Otago are expected to be released later this year, and for Queenstown, next year.
The valuations are required under the Rating Valuations Act 1998 at least once every three years.
Their main purpose is to provide a basis for levying rates.
The Dunedin revaluations mirrored national trends and people should not be alarmed over their properties dropping in value, Quotable Value Southern operations manager Brendon Bodger said.
"Obviously, the market is difficult at the moment, and the level of sales volumes are right down on previous years.
These market conditions have reflected in the values."
Mr Bodger said owners were aware of the property market in their area, and revaluation assessments "do not come as a surprise to most people".
Those people who were concerned about their rating valuation, or were looking at buying or selling a property, would be well advised to get a fully registered market valuation.
"At the end of the day, this is a rating valuation; it is not a complete property valuation."
The process of revaluation involved interpreting the property market as at July 1, 2010, including inspecting recent sales, looking at current asking prices and talking with property professionals, he said.
"We therefore like to think that we are just mirroring what the community are telling us through the sales level of the property. We then adjust the current values and inspect a sample of properties to ensure the accuracy."
Mrs Clark said that while revised values were from July 1 this year, they would not be taken into account for rating purposes until July 1, 2011.
However, properties that had held their value or recorded an increase were likely to be subject to a rate rise, she said.
Rates would be discussed as part of the annual plan process, with a final decision expected by council next year.
