Nelson’s properties have all been revalued and residential land value across the city dropped 16.08 per cent on average, but where did values fall the most?
Properties are revalued every three years to help councils set rates for the following three years.
The most recent revaluation in Nelson is a snapshot of the market in September 2024. The last valuation was taken in 2021 during a “property boom”, and the average 16.08 per cent drop in residential land value reflects the downturn seen since.
“It is normal for a market to see some sort of correction in prices after such a strong lead-up,” says Craig Russell, Quotable Value (QV)’s manager for Nelson/Marlborough.
“Interest rates as at September 2024 were at historically typical levels, but with housing supply at very high levels, which provides buyers with plenty of choice, and no feeling of urgency to buy – this results in falling values, especially when sellers are keen to move on.”
Nelson bases its rates off land value, but even though residential land value fell by 16.08 per cent, that doesn’t mean your rates bill will also fall.
The city’s rates will increase next financial year by an average of 6.5 per cent. If your property’s land value has dropped by the average, correspondingly your rates will be increasing by about the average 6.5 per cent. But if your property has dropped in value by less than 16 per cent or has gone up, you will have a larger rate increase.
About 900 properties will have a rate increase of more than 10 per cent.
Properties in the Atawhai area have seen the greatest drop in their land value, plummeting by 21.01 per cent.
Close behind was the Nelson College/Nelson East area dropping 19.03 per cent, Tāhunanui and the Port Hills falling 18.21 per cent, and the Central City/Wood area decreasing 18.11 per cent.
Craig says the August 2022 storm exacerbated the softening market across these areas.
“We have seen the market discount properties in these locations regardless of whether the property has been directly impacted or not; due to a reduction in purchasers risk tolerances,” he says.
“Generally speaking, the greatest land value discounts were hill locations which experienced land instability as a result of the weather event.”
The Tāhunanui Slump area received the most notable drop in land value since 2021, plummeting between 30 and 50 per cent, with some falling even further.
The Nile St/Cleveland Terrace area, also badly affected in the 2022 storm, saw land values fall by about a quarter.
Atawhai’s steep drop, however, was also influenced by an oversupply of sections and increasing costs of developing property on sloping land.
“In some instances, we are seeing the cost of new homes exceed their value.”
Areas less impacted by the 2022 storm saw smaller decreases more in-line with the average decrease across the city.
The Washington Valley/Abraham Heights area saw residential land value drop 14.73 per cent, the Wakatu/Annesbrook area fell 14.43 per cent, and Stoke declined by 14.22 per cent.
Nelson South, which typically comprises entry level properties, saw some renewed interest from first home buyers which saw land values fall below the city average at 11.38 per cent.
But Nelson’s more rural areas, those residential properties most removed from the core urban areas nearer the hills that surround the district, saw the smallest drop in land value, falling by just 8.23 per cent.
While land value fell across the city for residential properties, industrial land surged by 22 per cent, while commercial land climbed by 6.8 per cent.
“Broadly speaking, industrial property remains the investment of choice and demand is still strong, although interest rates have emphasised the importance of a good lease and yield,” Craig adds.
