What is a rateable value in NZ? RVs explained

In NZ rateable value (RV) is sometimes also referred to as GV (government value) or CV (capital value). This is a property value set by your local council in order to help figure out how much they should charge each homeowner in rates. 

To arrive at a number they use data gathered from recent sales in the area, spun through an algorithm. In their calculations they consider three things:

• Capital value (CV): the value of the property based on recent comparable sales. 

• Land value (LV): the predicted value of the land. 

• Improvement value: capital value minus land value. This typically describes any buildings on the land (i.e. homes), plus landscaping, driveways and services installed.

The council also holds information on each property such as type, location, section size, zoning, consented work and more. They’ll factor in all this when they determine RVs. 

Councils are required by law to calculate a new RV for every property every three years and regions around the country do this at different times. For example, Auckland is due for new RVs in late 2024, along with  Kaikōura, Southland, Palmerston North and Wellington. It's Queenstown's turn to get notified of new RVs in early in 2025, along with Nelson and Central Hawkes Bay. 

Rateable values provide a snapshot of what a property may sell for at the date they’re assessed. But the council is very clear - RVs are calculated to apportion rates, not to provide property owners or buyers with an accurate market valuation. Here’s why you shouldn’t rely on your RV to figure out the value of your property:

• Property values change fast so rateable values are quickly out of date. 

• RVs are also amended at different times in different regions, which means if you’re using them as an indicator of value you need to know when your region’s RV was set and what’s happened to the market since then. For example, Wellington property was selling for 22% below CV in May 2024 because their RVs were updated at the peak of the market in 2021 and Wellington prices have since decreased. 

• Council doesn’t actually visit your property to calculate your RV. That means they don’t take into account stuff that affects your home’s value like its condition, chattels, architecture, views or decor. 

• The council doesn’t put that much effort into CVs because the fact is, they’re used for setting rates, not determining an accurate property value. 

With this in mind, it’s always best to take CVs with a grain of salt. In some cases they may roughly reflect a property’s market value, but they could also be 25% under or over. To get a true idea of your property’s worth you need to instead consider the market value.

A property’s market value is whatever buyers would pay for it at a given time. The only way to know this value with complete certainty is to advertise a property for sale and invite offers - the highest offer is its market value. 

The next best way to figure out a property’s market value is to:

• Get a valuation. These are provided by registered valuers and generally cost around $800 to $1,000. Valuations are often required by lenders when you buy a property. 

• Or get a sales appraisal. These are provided by real estate agents and are usually free. Most agents will provide an appraisal range of between $30,000 or more. For example they may say a property is likely to sell for $700,000 to $750,000. 

Both valuers and real estate agents will visit the property to inspect its condition, improvements, views, architecture and more. They’ll then consider recent sales in the area and market conditions at the time before deciding on a figure. 

The result is an indication of a property’s market value that is generally much more accurate than a CV.