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Do Objections to Capital Value Influence House Prices?

Author/s: Olga Filippova

Date Published: 1/01/2014

Published in: Volume 20 - 2014 Issue 2 (pages 119 - 128)

Abstract

The bigger the capital value (CV) of your house the bigger the rates bill. In New Zealand CVs provide a basis for levying rates at the local government level. At the time of a general revaluation, some property owners object to their CV. Property sellers sometimes use the current CV in marketing efforts for their properties and CV becomes a reference point in buyers’ decision making. The aim of this study is to understand if successful CV objections affect prices of objectors who subsequently sell their property. To test price impacts, properties whose owners objected to the 2008 revaluation were identified and analysed within the residential sales transactions for Auckland City between Q4 2008 and Q4 2009. Contrary to anecdotal evidence, the empirical results indicate that increasing CV does not have a statistically significant effect on sales prices.

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Keywords

Capital Value - Hedonic Price Model - House Price - New Zealand - Property Tax

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