Why Dunedin’s CVs Are Misleading — And What The Big Short Can Teach Us
In The Big Short, Dr. Michael Burry exposed how Fed policy—keeping rates artificially low and pumping liquidity into markets—distorted risk and inflated asset prices, creating bubbles detached from fundamentals. Today, those same forces echo in Dunedin's property market, especially when we look at the capital values (CVs) set in mid‑2022.
Dunedin’s most recent CVs were assessed at the mid‑2022 peak of the post‑COVID housing boom, reflecting a period of record low interest rates (OCR at 0.25%), massive quantitative easing (NZ government bond purchases), and deregulated lending conditions. This created inflated sale prices that became the baseline for those CVs—a snapshot of a stimulus‑fuelled spike, not sustainable value.
By contrast, New Zealand’s monetary policy is in a very different place now. As of 9 July 2025, the Reserve Bank of New Zealand held the Official Cash Rate at 3.25%, pausing after six consecutive cuts that brought the OCR down from its mid‑2024 high of over 5.5%. Annual headline inflation sits at about 2.5%, within the RBNZ’s 1–3% target band, supported by declining core inflation and spare capacity in the economy. Despite holding for now, the Bank signals more cuts are likely, including, perhaps, at its August meeting, should inflation continue easing.
Looking forward, the RBNZ’s May forecast anticipates the OCR will fall to around 2.92% by Q4 2025, and to approximately 2.85% in Q1 2026. Analysts broadly agree: some expect a terminal rate near 2.75% by late 2025 (per BNZ, ANZ, and Capital Economics), while others even see a possible 2.5% floor if global conditions deteriorate.
Yet past stimulus and cheap credit still echo strongly in the CV numbers that Dunedin property owners are familiar with. Even though updated CV notices are due to arrive around October 2025, those valuations will still reflect mass appraisal methods and lagging data—not the nuanced, live price signals buyers are responding to today.
🌐 2024–2025 Market Reality
Since CVs were set:
The OCR climbed from 0.25% to 5.5%, and has since been cut back to 3.25%
Mortgage rates have more than doubled, with many fixed terms now above 7%
Borrowing capacity has dropped 20–30%
Homes selling in Dunedin are routinely trading below their 2022 CVs—sometimes significantly
Even with new CVs on the way, they won’t immediately reflect that downward reset. As the RBNZ remains cautious, pausing further cuts for now, the economy is being allowed to absorb past changes before any more policy shifts.
Analysts like ANZ, ASB and BNZ advise that mortgage borrowers consider a mix of fixed terms and floating rates—locking some into current low levels while remaining flexible as rates edge down further. ANZ and BNZ suggest the bottom of the cycle will land between 2.75% and 3%, with long‑term mortgage rates expected to hover around 4.5–5.0% by year-end.
🔄 Why CVs Are Out of Sync—and What It Means
In short, Dunedin’s CVs are relics of a market turbocharged by cheap money and stimulus. They were set when low rates encouraged speculation and over-borrowing—and when market psychology had yet to be reshaped by rate rises.
This mirrors Burry’s warning: artificially low rates misprice risk and disconnect asset values from economic fundamentals. Now, the correction—delayed but inevitable—is catching up. Even though CV re-rates will be issued soon, they still won’t reflect the reality of 2025’s credit environment, buyer caution, or regional demand shifts.
If you're buying or selling property in Dunedin, don’t rely on CVs set during a moment of economic distortion. Live mortgage rates, current OCR policy, and active sales data are what drive pricing today.
💬 Final Thoughts
The RBNZ OCR is currently at 3.25%, with further cuts expected to land between 2.75% and 2.92% by early 2026. Mortgage rates remain elevated, but may begin easing gradually. Even so, CVs—whether 2022 numbers or the upcoming 2025 re-assessment—are fundamentally backward-looking.
True market value is shaped by live conditions, not lagged appraisal models. If you want an accurate, modern snapshot of where your property stands, I’m available to provide a current market appraisal based on real-time data—honest, grounded, and tailored to Dunedin’s evolving landscape.
Contact me anytime for no-obligation advice or updated pricing insights.
