What does CV stand for in New Zealand property valuation?
Correct Answer
A) Capital Value
CV stands for Capital Value, which is the probable price that would be paid for the property if it were sold on the open market by a willing seller to a willing buyer. This is one of the three rating valuations used by councils in New Zealand.
Why This Is the Correct Answer
CV is capital value: the sum the owner's interest might be expected to realise at the valuation date if offered for sale on reasonable terms. It includes land and improvements.
Why the Other Options Are Wrong
Option B: Current Value
"Current value" is not what CV means; capital value is set at the revaluation date and may be out of date.
Option C: Commercial Value
CV applies to all property types, not just commercial property.
Option D: Comparative Value
"Comparative value" is not a rating term; CV is capital value.
Deep Analysis of This Valuation Question
Capital value is a mass-appraisal figure set for rating as at a single date across the district. It is useful context, but a licensee should rely on current comparable sales, not CV, when advising on price.
Background Knowledge for Valuation
A rating valuation records capital value, land value and value of improvements (capital value = land value + value of improvements). The Local Government (Rating) Act 2002 lets councils set rates on capital value, land value or annual value.
Memory Technique
Think of CV as the 'Capital Castle' - the total value of your property kingdom including both the land (your territory) and the castle (buildings) built upon it. Just like a castle's worth includes everything within its walls, Capital Value includes the complete property package that would be sold to a willing buyer.
When you see CV in exam questions, immediately think 'Capital Castle' to remember it's the total Capital Value of the entire property, not just current, commercial, or comparative aspects.
Exam Tip for Valuation
Remember CV = Capital Value by thinking 'Complete Value' - it's the total value of land plus improvements that councils use for rating. Don't be confused by similar-sounding alternatives.
Real World Application in Valuation
When listing a residential property, an agent reviews the council's rating information showing a CV of $850,000. This Capital Value helps establish a baseline for market pricing and explains to sellers how their rates are calculated. The agent can compare this CV with recent sales to advise on realistic pricing expectations, while also explaining that CV may differ from current market value due to timing differences between council valuations and market fluctuations.
Common Mistakes to Avoid on Valuation Questions
- •Confusing CV with current market value - they may differ due to valuation timing
- •Thinking CV only applies to commercial properties rather than all property types
- •Assuming CV stands for Current Value instead of Capital Value
Related Topics & Key Terms
Key Terms:
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