Improvement Value

Improvement value represents the value that buildings, structures, and other improvements add to a property above the bare land value. It's calculated simply as capital value minus land value. For example, if a property has a capital value of $800,000 and a land value of $500,000, the improvement value is $300,000.

Improvement value can tell you a lot about a property. A high improvement value relative to land value suggests the buildings are well-maintained, recently built, or significantly upgraded. A low improvement value may indicate older, basic, or poorly maintained buildings — or that the property's value is predominantly in the land.

For new-build properties, the improvement value should roughly reflect the cost of construction (adjusted for depreciation in subsequent valuations). For older properties, improvement value tends to decline relative to land value as the buildings age and the land appreciates.

Understanding the improvement value helps you assess whether you're paying primarily for the land or the buildings. If improvement value is low, the asking price is essentially for the land — meaning the buildings may not be adding much value and could need significant investment.

This analysis is particularly useful when comparing properties. Two homes at the same price but with different improvement-to-land ratios represent different types of investment — one in buildings, the other in land and location.

Improvement value is shown on the council's rating information, the QV website (qv.co.nz), and the LIM report. It's calculated as capital value minus land value. Compare the improvement value to the apparent quality and age of the buildings to see if the figures seem reasonable.