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  • Represents an estimated price as of the valuation date, often outdated due to market fluctuations.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.

Previous
Previous

Welcome to our newest team member!