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A Pinch of Rateable Salt: Ben’s Barometer April 2016

A Pinch of Rateable Salt: Ben’s Barometer April 2016

A pinch of rateable salt.

For those who don’t live in Wellington, or read the Dominion Post, you may have missed a recent article heralding the success, or otherwise, of a real estate company who had achieved a sale price of $700K above the RV for a home in Wadestown. The company in question waxed lyrical about the result but omitted key facts notably that the property had undertaken extensive renovations, which meant that the rateable value had absolutely no correlation to the market value of the property. In my opinion, quoting a sales percentage over rateable value indicates a lack of knowledge and skill. Any agent worth their salt will use ACTUAL comparable sales to gauge market value, and ultimately the success of their sales campaign. Not quote the value based on a method developed for the apportioning of rates. I can almost guarantee that the appraisal range provided to the vendor prior to the market campaign, did not include a value in any way similar to the RV.

Why are our current RV’s out of date already?

A rateable value is a snap shot of the Wellington market at any given point of time. It is not uncommon for the value to be outdated from the time of issue. The problem with a value such as RV, is that it is a number derived using regression analysis* based on historical data. It is not a fluid value and as such cannot increase or decrease as markets change. During the previous property boom which occurred between 2002-2007, the Wellington Council moved to yearly reviews in an attempt to better reflect the market value.  This was also a great way for the Council to increase rates takings on the back of perceived wealth. In 2009 they reverted to three yearly reviews when the market plateaued which means, in a market like we are experiencing at the moment, they are rarely reflective of market value.

Why do agents use RV’s in ad headlines?

If the rateable value has some relevance to the assessed market price, then using the RV in the heading can be a good method of attracting potential buyers. Where the  frustration sets in is when the level of the RV is not in any way relevant to the level the the vendor is willing to accept. Sometimes less is more. Attracting the right buyers to the property is better than attracting the most buyers.

If the rateable value has some relevance to the assessed market price, then using the RV in the heading can be a good method of attracting potential buyers. Where the  frustration sets in is when the level of the RV is not in any way relevant to the level the the vendor is willing to accept. Sometimes less is more. Attracting the right buyers to the property is better than attracting the most buyers.

Salt & RV’s

Lastly take everything that is reported with a pinch of salt. Your best guide to price is research. Take the time to view as many properties in your perceived budget as possible, drive by comparable sales to see how they do in fact compare and call agents to find out what properties ‘sold ‘ for. Nothing like boots on the ground.

** In statistical modelling, regression analysis is a statistical process for estimating the relationships among variables. It includes many techniques for modelling and analysing several variables, when the focus is on the relationship between a dependent variable and one or more independent variables (or ‘predictors’).

Click here to find out how your RV compares to the current market value.

Wellington Market

Unless you have been hiding under a rock it would have been hard not to notice the activity in Wellington, with plenty of media hype around the ‘hot market’, low stock levels and prices rising month on month. Quite interestingly, in the last few weeks, we have seen this start easing slightly. The first reason for is likely to be due to annual trends as we move into autumn/winter. We have also started to notice that some buyers are no longer willing to engage in the sale process. Frustrations are building and buyers that have been struggling to secure a property can only be knocked down so many times before they give up.  I was sitting down with a client a couple of weeks ago who mentioned a line from a Bob Jones seminar he went to in the 1980’s  “The reality today isn’t the reality tomorrow, things change. ” We will watch with interest.

1-5 MAIN

Wellington property quick facts

The average sale price by area for February

2015

2016

Central$417,500$483,750
Southern$537,500$658,000
Northern$478,000$555,000
Western$617,500$684,000
Eastern$585,000$645,500
Wellington$410,000$451,000

Percentage increase year on year 14%

Average sale price for February 2016: $579,634

Average days on the market for February 2016: 23.8 days

April facts:

On Monday April 25th we celebrate ANZAC Day, so we thought we’d share some facts about ANZAC Day and why we honour this day:

  • The ANZACs were all volunteers
  • April 25, Anzac Day, was the day the Australian and New Zealand Army Corps landed on the Gallipoli Peninsula in 1915
  • 25 April, was officially named ANZAC Day in 1916
  • ANZAC Day was not a public holiday in New Zealand until 1921
  • More than 11,000 ANZACs died at Gallipoli and more than 23,500 were wounded
  • Services are held at dawn because in battle, dawn was the best time to attack the enemy. Soldiers would wake in the dark so at the first signs of light they were alert and awake.

Please do not hesitate to call if you would like to discuss this topic or anything of interest in the property world. We are always happy to chat.

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