New property revaluations reveal 12% drop across Rotorua

New rating valuations start arriving in Rotorua property owners’ letter boxes this week.

The valuation project has been undertaken for Rotorua District Council by independent property valuers Landmass Technology Ltd whose valuers have spent recent months reviewing sales and undertaking inspections to determine the value of each property.

The overall result is that the district now has a total property value of $12.59 billion, a drop in the total value for the district of close to twelve percent since the last revaluation in 2008.

The total land value is now $6.45 billion and this is down 17% since 2008.

Rotorua District Council rates manager, Murray Ramage said the Rotorua property market had clearly responded to the same factors that were influencing values nationally and the changes were in line with other districts around the country.

The new valuations aim to reflect the market conditions prevailing as at 1 July this year. Each valuation comprises three components, the capital value, land value and value of improvements.

Capital value is the total value for the property excluding chattels (such as curtains carpets light fittings). The land value is the value of the land only as if it were totally vacant. Both of these values are determined by comparing sales of similar properties. The value of improvements is simply the difference between the land value and capital value.

A summary of the value movements for each category of property over the total district since 2008 is seen on the attached table.

The general downward trend in values for all classes of property is in contrast to the previous 2008 valuation when values were close to the peak established in the buoyant economic times of 2005 through to 2007. Since then the global financial crisis has occurred and other negative influences have been impacting on different market sectors.

Mr Ramage said the residential market had come off the boil with a significant drop in the volume of sales but overall it was a surprisingly small decrease in values.

“Within this market there are different results for varying sectors. Values in holiday home locations around the lakes have remained reasonably strong whereas some landlords have been quitting rental properties in a market that has little appetite for residential investment. This has seen values in these situations dropping by more than the average.

“The lifestyle property market tends to follow the trends of the residential market as people trade in and out of each sector. The result is that the move in values for lifestyle blocks is quite similar to the residential market even though the volume of sales remains low.

“Nationwide many occupiers of commercial and industrial property have been suffering from a downturn in trade which impacts on rental and vacancy levels and the risks associated with the ownership of this type of property. Rotorua is no different and here we’ve seen decreased property values for most classes of investment property.

“Pastoral property values in the district are strongly influenced by the dairy sector and July 2008 was very much the peak in dairy farm values. There has been a sharp drop from that peak so pastoral values are down by as much as 30 to 40 percent from 2008. This is very much in line with the national trend with the values supported by strong sales evidence."

Mr Ramage said the new valuations would not come into effect for council rates purposes until the start of the 2012/13 financial year (01 July 2012). He pointed out that property value changes have no affect on the total amount of rates revenue collected by the council.

Property owners will be able to lodge an objection if they believe their new property valuation has not been correctly assessed. Information on the objection process will be included with the new valuation notices being mailed out next week, and objections will need to be lodged by 14 November 2011. The new Rotorua District Valuation Roll will shortly be open for public inspection at RDC’s Civic Centre in Haupapa Street, and online via the Rating Information Database on the council’s website www.rdc.govt.nz.