Help me understand how my rates are calculated

Wednesday, 11 June 2025

CFO Ross Tucker says lower home valuations don’t guarantee lower rates. Auckland Council’s total budget stays the same—how much you pay depends on how your home’s change stacks up against the city average.

Auckland Council's new property valuations from May 2024 show an average 9% drop in residential property values since 2021.

Property valuations determine rates bill with 5.8% average residential rate increase for next year.

Valuations done by independent valuers QV and Opteon using data-driven desktop exercise.

Around water coolers across Auckland on Tuesday, the main topic of conversation would have been the council’s new ratings valuations for all of the city’s properties.

Auckland Council typically sees 500 users on its website at any given time, but on Tuesday the number was 12,000.

These property valuations are used to determine how big everyone’s rates bill will be. Overall, there has been a drop of 9% on average for residential properties compared to the last time this was done in 2021. But what does this all mean to you?

Stuff put the questions to Auckland Council’s Chief Financial Officer, Ross Tucker, to help you understand.

On average, the value of a house in Auckland dropped by 9% between 2021 and 2024.

First of all, the big one. If the value of my house has gone down, does that mean my rates bill will be smaller?

Ross Tucker: It's not a simple case of, if your house value goes down 5%, your rates go down 5%. Council determines through its budget process how much revenue it needs to collect to cover the cost of running the city, to pay for transport, parks, etc.

Through its budget process, it determines how much it needs and what the average rate increase is. For next year, it's a residential rate increase of 5.8%.

Where the property valuations come in determines how that's shared between different ratepayers.

So if you've had the average reduction of 9%, you could expect to see a rates increase of about that average of 5.8%

However, if the value of a property has gone down by more, say 15%, you could expect to have a smaller rates increase than 5.8%.

Conversely, if your value held up better, and you've only had a 5% reduction, then you'd expect to see a higher rates increase than that 5.8% average. So it's all about how your property has moved, compared to the average value in Auckland.

Why has the value of my house gone down and do the figures released today tell me how much it’s now worth?

Auckland Council’s chief financial officer Ross Tucker says the property valuations released on Tuesday don’t give home owners a current valuation of their house.

Tucker: If you think back to 2021, that was when mortgage rates were at record lows, the Official Cash Rate was at its record low, and there was a big boost to house prices post-Covid.

Those valuations in 2021 were done close to that property peak.

Since then, we have seen the cycle change. We've seen the Reserve Bank hike the OCR to 5.5% and that has sharply increased mortgage rates, and led to a reduction in residential property [valuations], meaning it's the biggest driver of that 9% reduction from 2021 to 2024.

A reminder that these valuations out now are the values as at May 2024, they are not an indication of what properties would sell for in the current market.

These are valuations from May 2024, so why does it take so long for this information to come out?

Tucker: It's a big process. Auckland has 630,000 properties. Also, Auckland is changing and evolving. There are lots of different property types, and lots of zoning changes. It takes quite a long time to work through all that stuff. Also, the Valuer General sets very high standards. Because we use these values for rating purposes, we have to make sure there's really strong market evidence to support that.

So how are they calculated?

The Auckland Council's rating valuations are done by our two expert independent valuers. That's QV and Opteon. They don't go out, inspect every property and look at it, they do a desktop exercise, and it's all data-driven.

They look at a range of data factors. Where is the location of the house? What is its floor size? What is the land area? Is it a coastal property? What are the construction materials?

They then look at sales data from that period and property trends to try to get a sense of how comparable properties sold in the market compared to your property.

So for example, if you've got a renovated villa in Grey Lynn, they'll look at other renovated villas in Grey Lynn, see what they sold for in May 2024, adjust for things like land area and floor size, and come up with a best estimate of what your properties would have sold for.