Feature article

Auckland property owners face rate hikes despite CV declines

Let's break down what's happening.

Heaps of Auckland property owners are in a bit of a head-scratching situation. Their property's capital value (CV) has dropped, but their council rates are still on the rise. It's left a lot of Kiwi wondering what’s going on.

We get it. On the surface, it doesn’t seem to make much sense. Let's break down what's happening.

First up, what even is a CV?

A Capital Value (CV) is just the council's best guess of your property's market value at a single point in time. They use this number as a starting point to figure out how much your property rates will be.

You’d think a lower CV would mean lower rates, but that's not always how it works.

“Indeed, if you’re a seller, the piece of paper through the mail doesn’t mean you’ll get a lower price now than you would have got a week ago!” said Chief Property Economist Kelvin Davidson. “People do look to CV as a way of estimating value, but there are other/better/timelier methods – such as comparable sales over the most recent few months, or an automated valuation.

He said, “If people disagree with their CV, they can always appeal to potentially get it changed, either up or down.”

So, why are my rates going up if my CV is down?

It feels a bit like a magic trick, but there are a few real reasons why this can happen. It all comes down to how the total rates pie is sliced and diced.

The council’s budget comes first. Auckland Council decides how much money it needs to run the city and provide all the services we use. This total amount is the starting point. Even if property values dip, the council might need to collect more money overall to cover its costs, which means a higher rates bill for everyone.
The cost of everything is going up. Just like for the rest of us, inflation pushes up the council's costs for wages, materials, and services. To keep the city running, they need to adjust rates to cover these higher expenses.
Big projects need funding. Things like major infrastructure upgrades or new community facilities don't come cheap. These big-ticket items are funded by rates, so when it’s time to build, rates can go up regardless of what the property market is doing.
It’s about your slice of the pie. Rates are based on your property's value compared to all other properties in Auckland. If your CV dropped by 5% but your neighbour’s dropped by 15%, you'll end up paying a bigger slice of the total rates bill. It’s a bit of a balancing act.

"This data is already 'old' (from May 2024), so people shouldn’t get too downbeat about them, especially since they’re only really there to apportion rates. The market has already moved on from there so current/timely data will be more important in determining a price rather than your CV.

“Ultimately, your wealth hasn’t necessarily gone down because of a reduced CV, but people need to always be planning for the increase in actual rates bills that they might face year on year", said Davidson.

Thinking about selling and want to know what your property is worth in the market? Match with a local agent to get a free appraisal.

Author

Alex Hallifax

Alex is a Marketing Specialist with a passion for all things property. She believes that where we live is about more than just a place to sleep — it shapes how we live. With a love for storytelling, Alex enjoys shining a light on the real experiences of people across Aotearoa, sharing insights that help Kiwi feel more confident and inspired on their property journey.