By Frank Newman on 19th October 2016
In recent months finding data about a property has become a whole lot easier, thanks to two free APPs.
Trademe has just released a new tool called ‘Property Insights’ which it says “provides property data and information about residential properties across New Zealand, empowering Kiwis to make better property decisions”.
They go on to say, “The site has a database of 1.5 million New Zealand homes, including their rateable values, previous sales price, information on when the house was built and its floor size. It also generates an estimate of the home’s current value – based on the sales of similar properties and details of listing and user activity on Trade Me.”
Trademe’s site follows just months after the release of another free valuation tool called ‘Homes.co.nz’, which does pretty much the same thing. In both cases the data is supplied by local councils, including the sold data, and is updated monthly.
Both sites claim to apply a secret algorithm, which they guard like KFC’s secret fried chicken recipe. The truth is probably they are using a traditional valuation approach which estimates a market value by comparing its rateable value to recent sales nearby and how the sale price of that property compared to its rateable value. I doubt that either site has discovered a miracle algorithm that will transform (“disrupt”) the valuation industry.
Both sites obtain their data from the same source so both have to deal with the inaccuracies of that data, and the fact that the assessments are a desktop approach and not based on an inspection of each property.
Both are upfront about these limitations and are at pains to point it out in various disclaimers. Trademe shows the limitations of the data for a particular property as a star rating, from no stars (“Not enough data to create an estimate”) to five stars (“Most amount of data and smallest range”). The more stars, the more confident Trademe is about the estimate.
Homes.co.nz enables the homeowner to update the information about their property which may be useful for those who wish to correct errors, but some will be reluctant to add further detail given it’s open access to everyone, including nosy parkers and those with criminal intent.
To see how consistent the two sites are I have compared the valuations of two fairly typical three-bedroom properties in a provincial city. For the first, Homes.co.nz had a price range of $320k-$375k, with a mid-range estimate of $350k. For the same property, Trademe had a price range of $350k to $430k and an estimate of $390k. In this case there was an 11% difference, Trademe being the higher.
For the second property, Homes.co.nz had a price range of $440k to $510k, with an estimate of $475k. Trademe’s price range was $390k to $490k and $440k as an estimate. In this case the difference is 8%, with Homes.co.nz being the higher.
So what can we take from this comparison? There is no right answer to property valuation! Valuers and valuation APPs use different benchmark data, and may apply different formulas when estimating value. Those factors have a material effect on the result, which is why one always needs to look at the machinery behind a valuation to judge its reliability. Desk-top valuations are always nothing more than an indication of value. Every property is unique, as is each buyer with their own desires and intentions.
However, that is not to diminish the value of the Trademe and Homes.co.nz tools; they provide a ballpark figure, which is useful in the pre-due diligence stages of house hunting and to those who have a casual interest in knowing the value of their home.
What does surprise most people is just how much property information is available for the public to view, including the media who are starting to use the data in stories about the rich and famous – and infamous. Most people assume details about how much they paid for a property or how much it’s worth are confidential. Not so I am afraid. Satisfying those little curiosities is easy, and free.
There are other sites available on a paid subscription basis that extend the database further, enabling the user to search the entire NZ property register. That means the property holdings of an individual may be revealed with the click of a mouse. The data has always been available – it’s just that it’s a whole lot easier for a layperson to access now.