Understanding Property Valuation in New Zealand: Capital Value vs. Market Value
When it comes to property valuation in New Zealand, there are two key terms that often cause confusion: Capital Value (CV) and Market Value (MV). While both provide an estimate of a property's worth, their purpose, methodology, and accuracy differ significantly. Understanding these differences is crucial for homeowners, buyers, and investors.
Capital Value (CV) – A Mass Appraisal Approach
Capital Value is assessed by councils and government agencies through a "mass appraisal" process. This means properties are not individually inspected but instead valued based on recent sales data within an area. CV is reviewed every three years and serves as a basis for calculating council rates. However, it does not reflect current market conditions accurately, as it:
Is determined without a physical property inspection.
Represents an estimated price as of the valuation date, often outdated due to market fluctuations.
Excludes chattels (e.g., appliances, furnishings).
Applies a general percentage increase across an entire area, which may not account for individual property improvements or market shifts.
Market Value (MV) – A Precise and Current Estimate
Market Value is a professional assessment conducted by a Registered Valuer, providing an informed estimate of what a property would sell for under normal market conditions. This valuation:
Is based on a thorough property inspection and analysis.
Uses recent comparable sales (typically 5-6 within the last six months) to determine value.
Accounts for current market trends, property-specific factors, and economic conditions.
Provides a value range before determining a final estimate.
Key Takeaway
While Capital Value is a general estimate used for rating purposes, Market Value is a precise, professional valuation that reflects current market conditions. If you're buying, selling, refinancing, or making investment decisions, relying on a Market Value assessment by a Registered Valuer ensures accuracy.
Need a Property Valuation?
Whether you're a homeowner looking to understand your property's worth or an investor making strategic decisions, consulting a Registered Valuer provides the most reliable assessment. Get in touch with one of the Valuation Partners team today to make informed property decisions with confidence.