Wellington Property Market – 2018 RVs
If you own real estate in Wellington, you will have recently received your new rating valuation (RV). Your reaction, like many others, is likely to be one of slight shock (and possible delight) as your rating value will have risen somewhere in the region of 40-50%. I struggle not to roll my eyes when people explain that their property has gone up in value overnight. Yes, your new RV is a significant increase on three years ago. But your market value has been steadily (or rather rapidly in the case of Wellington) increasing over that period.
Conversations – Is RV the same as market value?
What has been interesting for us as agents is that while buyers had long ago stopped relying on RV’s as an indication of current market value, all of a sudden those conversations are back.
‘What’s the new RV?’ ‘Why are you advertising a BEO so far below/above the new RV?’ ‘I know you appraised my house at X but my new RV is Y so surely that means it’s worth more?’ The answer to all of these questions is the value of any given property has not changed. Any price indication or appraised range we provide is based on a number of recent sales for comparable properties.
So how did they come up with the RV number?
An RV is made up of two components: Land Value and Improvement Value.
Most of the increased value is in the land. This increase reflects the location and any increased demand in your region. New Zealand has experienced strong population growth of late and while much of that activity has been experienced in Auckland, that demand has pushed Aucklanders out to other areas, which in turns puts upwards pressure on demand in the regions.
The process to establish your improvements value (improvements include structures such as housing, garaging and decks) is the difference between the land value and the capital value (which in turn becomes your rating value).
What’s interesting about receiving your new rating valuation is that QV do not provide evidence to support the figure. In the old days of the Government Valuation Department, assessors used to physically inspect each and every property and the corresponding values were considered reflective of the market value (which is usually a range based on recent comparable sales). But if you would like to object to your RV you will be required to provide evidence to the contrary.
Purchasing property in the current market
Lending has got increasingly hard of late. Just the other day I was discussing the process of buying with some purchasers. A condition of their finance pre-approval was that the bank would order a desktop valuation for any prospective properties and that this value would cap the amount they were prepared to lend. What I found interesting about this approach was
- The banks are currently very concerned about the value of the asset
- Banks are pre-determining value based on a property that has never been seen
When assessing the value of any asset, the danger of relying on any given sale is that is can throw your number out significantly. And this is a major risk of desktop assessments. One stand-out, above or below market transaction in your area, can increase or decrease the value of a desktop assessment. This could ultimately price you out of the market.
In addition, the danger for the bank is that the any given house could be subject to an underlying defect that could negatively affect this value. This could be issues such as weather tightness or proposed developments in the area.
The Wellington Real Estate Market
From mid-December the market will start to slow as we move our attention off property and on to the big guy with the beard. Overall the Wellington market has held up well with a recent levelling off after three years of frantic growth.
So that’s it for 2018 folks and I’d just like to say it has been an absolute pleasure to have you reading our updates. Have a safe and happy holiday period from our team to yours.
WELLINGTON MARKET QUICK FACTS
Average sale price by Ward:
What’s on this December in Wellington:
- Old St Paul’s Christmas Movie Night, 34 Mulgrave St, Thorndon. Saturday 15th Dec 6pm-9pm
Old St Paul’s is excited to be hosting a Christmas Movie Night! This event will be a special screening of the PG rated film: The Polar Express. So gather up your family and friends and join us for this unique and magical cinema experience. Doors open at 5.30pm. Arrive early and make yourself comfy as the screening starts at 6pm. Our Christmas shop and gift shop will be open before and after the movie for any last minute shopping. Remember to use the password ‘Nutcracker’ to receive a 10% discount in the shop.Click here to book your tickets - The ABBA Show – The Opera House, 111-113 Manners St, Wellington. Friday 14th Dec 2018 8pm – 10.30pm
Direct from Australia, and following more than 5000 international shows, the world’s premier live ABBA tribute – The ABBA Show – is coming to town! Far from being ‘just another cover band’, The ABBA Show is a full-scale theatrical production featuring 2.5 hours of live musical performances, a live backing band, replica costumes, theatrical lighting and effects and all the dancing an ABBA fan can handle.Click here to book your tickets - The Wellington Christmas Markets – Wellington Underground Market, Jervois Quay, Wellington Waterfront, Wellington
This annual event is always a buzz. Shoppers not only love the huge variety of uniquely Wellington gifts on offer but to know their money is going to support local small business is truly a win-win for everyone. It’s festive fun for the whole family – shop at over 100 beautiful stalls, and listen to some music while you eat a delicious variety of street food! Both Saturdays and Sundays for the 4 weekends leading up to Christmas.Click here to find out dates and times
If you, or anyone you know, could benefit from a considered market assessment by Wellington’s only licensed agent and registered property valuer, please do not hesitate to call. We are always very happy to help.
