The new rating valuations have been prepared for 82,591 properties on behalf of Wellington City Council by Quotable Value (QV). They show the total rateable value for the district is now $98,833,462,501 with the land value of those properties now valued at $51,250,813,101.
Rating valuations are usually carried out on all properties in New Zealand every three years to help councils set rates for the following three-year period. They reflect the likely selling price of a property at the effective revaluation date, which was 1 September 2024, and do not include chattels.
On average, the value of residential housing has decreased 24.4% since 2021 with the average house value now sitting at $1,086,000, while the corresponding average land value has decreased 36.7% to an average of $621,000.
QV Chief Operating Officer David Nagel said rating valuations are like a snapshot of the market at a point in time. “When these were last set, back in 2021, the market was obviously rising very quickly, buoyed by record low interest rates. It then experienced some steep declines in 2022, influenced by higher interest rates and tighter credit conditions, as well as a higher rate of inflation and unemployment,” he said.
“Now, these latest rating valuations for Wellington City are reflective of a market that is still being affected by strong economic headwinds. Sales volumes have reduced, and sentiment has changed markedly from being a sellers’ market to being a buyers’ one.”
He said housing that was newer or of higher quality had retained their values slightly better – though all suburbs were showing average Capital Values reductions of between 12.1% and 29.3% over the past three years.
“It will come as no surprise to anyone that demand for residential housing in the capital city has not been as strong as what it was three years ago. Since our last revaluation, there has been an increase in housing supply, which paired with reduced demand and higher borrowing costs, has ultimately led to lower values,” Mr Nagel added.
Meanwhile, many of the same economic factors have impacted the commercial and industrial sectors.
“The cost-of-living crisis, high interest rates, remote working and public sector job cuts have all resulted in higher vacancy rates and lower rents. But once again prime office and industrial rents are holding up well due to relatively low vacancy rates, with higher value properties typically holding up better.”
Commercial property values have decreased by 21.0%, and property values in the industrial sector have decreased by 12.2% since the city’s last rating valuation in 2021. Commercial and industrial land values have also decreased by 33.0% and 17.9% respectively.
Mr Nagel said the industrial market has compared relatively better to commercial on a national scale for some time now – a trend that has continued in Wellington City.
The average land value decrease for commercially zoned land has been 33.0% since 2021, which Mr Nagel attributes to a drop in the demand for development land.
“In the 2021 revaluation, there was huge demand for redevelopment land on the city fringes, such as Te Aro, Mount Cook and Newtown. This time around, the demand for redevelopment land is almost non-existent,” he said.
Since 2021, the average capital value of a lifestyle property has decreased by 13.0% to $1,396,000, while the corresponding land value for a lifestyle property decreased by 17.7% to $566,000.
“Lifestyle property makes up a modest part of the Wellington City market, with a little over 600 lifestyle properties predominantly in the Makara, Ohariu Valley and Horokiwi areas. This sector of the market has performed relatively better due to the low level of supply of lifestyle properties within Wellington City.”
Mr Nagel said there were limited true rural properties in the city with less than 40 properties in total.
The effective rating revaluation date of 1 September 2024 has passed and any changes in the market since then will not be included in the new rating valuations. In many cases, this means a sale price achieved in the market today may be different to the new rating valuation set as at 1 September.
The updated rating valuations are independently audited by the Office of the Valuer General and need to meet rigorous quality standards before the new rating valuations are certified. They are not designed to be used as market valuations.
The new rating values will be available on the QV and City Council websites from 5 February 2025. They will be posted or emailed to property owners from 12 February 2025. If owners do not agree with their rating valuation, they can submit an objection by 31 March 2025.
Wellington City Council’s Manager of Financial Operations, Michael Nyamudeza, said it was important that property owners remember that a change in the rating valuation of a property does not mean rates will change by a similar percentage.
He said the Council uses property values to allocate the rates it needs to collect across all ratepayers – it doesn’t collect more rates because values have increased, and it doesn’t collect less rates if values have decreased.
Rates increases for each property depend on a range of factors, including:
• the Council’s overall rates ‘budget’ calculated each year in the Annual Plan.
• the capital value change for your property compared to the average change
• any change in the mix of services the Council provides
• any change in targeted rates or the Council’s rating differential.