Interesting that the CV for this property assessed
the land at a value of $590,000 and the building at $280,000 yet the replacement cost of the building is estimated at $400,487. If the value of the land is appropriate (which is more likely to be the case) at $590,000 then the total 'value' of the land and building is very close to $1 million.
You are I am sure, interested to know the market value of the property today based
on that well established notion of a "willing buyer and a willing seller". Well
the property was sold recently for $1,395,000. This would therefore tells us
that the value of land in this area is actually appreciated by 68% since the
last assessment was undertaken in 2010/2011 – Auckland, or at least this area
of Auckland is experiencing unprecedented demand.
I was prompted to write this article by the comment sent to me by a
retired Quantity Surveyor who had read my article on why we should get rid of
CV’s, he rightly asked the question as to whether people had considered what
the long term effect will be on property / sales valuations once the insurance
industry changes over to declared values for house insurance policies. He
stated that as he had his own construction business engaging in construction of
architecturally designed houses & spec housing. Many of the houses that he
built had construction costs of more than double what the current CV values
were & he rightly wondered once owners start realising that replacement
costs far exceed the CV's for there property, that they will start to try &
negotiate selling prices based on replacement costs.
He reflected that this might well apply more to expensive
architecturally designed properties, but in his experience all building costs
usually exceeds CV values due too as most property valuations are based on
historical values & consequently out of date.
I am grateful for being prompted by this question and would gladly welcome
any other such questions for future articles.