So your property has increased in value — is it really good news?
With the recent release of Auckland Council’s 2017 Capital Valuation (CV) figures property values have been a hot topic of conversation. Most Auckland home owners will have been happy to have seen an increase in their property CV, but what does it actually mean? CVs are a property’s estimated valuation based on a collection of factors, such as recent sales, location, size, property type and improvements made. The valuation process is conducted by council every three years and there is no actual physical property inspection. Therefore it’s important to note that CV’s do not necessarily provide a true indication of a property’s market value. If you want a more accurate market valuation, a registered valuer is the way to go. So why do we have CVs? The CV helps council establish everyone’s share of rates to be paid. The CV also helps establish the level of equity you have in your property (i.e. the difference between the value of the property and how much you owe). This means your CV is one of the ways we can help calculate how much you can borrow against your home. So what does an increased CV mean for you? If your CV has gone up it’s a good indicator that you could borrow more against the equity created in the property. Perhaps you could top up your home loan and invest in property renovation or a rental property? However an increase in CV doesn’t automatically mean you can now borrow more. If you’re looking to extend your loan it’s likely that the CV figure will be sufficient, but in some situations it may need to be supported by an on-site inspection conducted by a registered valuer. Most importantly, even if you do have sufficient equity, it isn’t everything. As responsible advisers we believe that ensuring that you are not overburdened with debt is paramount. That’s why we work closely with you to ensure you can maintain your mortgage repayments now and in the future. So let’s chat. Tell us what you want to do and how much you think you might want to borrow, we’ll explore all the options and together choose a solution that suits. On average property values went up 45% - can we expect the rises to continue? According to ASB Economists, growth in average property values across NZ are expected to remain fairly flat over the next 12 months as the new Labour/NZ First government introduces various property-focused policies. However, over the medium term, population and income growth will contribute to modest price growth, particularly in areas where shortfalls of housing supply remain.