Auckland's New CV's

Why a Lower Capital Value Won’t Necessarily Mean a Lower Sale Price

Does CV really affect your property's sale value?

The average residential capital value across Auckland dropped 9% compared to the previous valuation in 2021. For many homeowners, a CV isn’t just a tool for the Council to assess rates payable, it’s treated as a badge of value. Some even appeal to the Council to raise their CV before selling, hoping to lift the perceived market value.

However, a deep dive into the data shows this tactic has no real impact.

A landmark study by Dr. Olga Filippova titled “Higher Capital Values: Are They Worth the Price?” analysed Auckland property sales. It compared properties with successful CV appeals against those with no appeal, all while considering location, property features, and sales conditions.

The finding was clear: whether a property’s CV was decreased, increased, or left alone, it had no statistically significant effect on its final sale price.

The CV myth is persistent, but data doesn’t lie. Council valuations don’t drive sale prices, buyers do and buyers are far more interested in real value than a number on a rates notice.

Why Council CVs Don’t Reflect Real Market Value

While widely assumed to be a meaningful indicator of market value, CVs are not actual valuations. They are bulk-assessed, infrequent, and don’t reflect the interior condition, renovations, or buyer appeal of a property.

Despite this, CVs often appear in marketing campaigns and are used by buyers and sellers as pricing anchors. Agents may even recommend appealing to the Council to increase a “low” CV before sale. But as research shows, these adjustments are irrelevant to actual transaction outcomes.

Buyers don’t pay for a number on paper, they pay for location, condition, presentation, and timing. A CV is just one data point, and often a misleading one.

Capital Value vs Real Estate Market Conditions

In hot markets, homes often sell well above CV. In downturns, even high CV homes can underperform. That’s because buyers rely more on recent sales, emotional appeal, and perceived value than any static figure calculated by the council.

Moreover, CVs can be manipulated. A seller may contest the CV citing some reason such as having made improvements to the property since the previous CV and the Council may then raise their CV. In some cases, a high CV may even scare off buyers due to inflated expectations or higher rates.

Do CVs Influence Buyer Expectations? The Research Says No

It’s often argued that CVs “anchor” buyer expectations. But Filippova’s study debunks this in practice. While CVs may be referenced in conversations, they don’t significantly influence outcomes when other market dynamics are at play.

What does matter when it comes to a sale price? Presentation. Pricing strategy. Seasonality. Negotiation skill. A clean, staged home with great photos and a smart pricing plan will always outperform one relying on a boosted CV.

How to Maximise Sale Price Regardless of CV

Rather than investing time and energy into CV appeals, sellers should focus on things they can control: preparing the property well, choosing the right time to sell, working with skilled agents, and pricing appropriately based on comparable sales.