New technologically advanced automated valuation model from REINZ

REINZ is in the process of launching its most technologically advanced product yet – a new automated valuation model (AVM) which uses advanced modelling and deep machine learning techniques to produce accurate and up-to-date sales price predictions for residential properties across New Zealand.

Property valuation plays an integral part in the end-to-end real estate sales process, not to mention the value that this information brings to other sectors such as banking, government, insurance, capital investment and economic forecasting.

While there is of course a place for an indepth property valuation to be carried out by a registered valuer in person, in an age of data-driven decision making, and a demand for instantaneous information, the industry has become accustomed to the presence of AVMs producing an ‘on the spot’ estimate when required.

REINZ has already been producing an AVM estimate for a number of years. However, with new and updated technology, we had an opportunity to create a superior AVM for our members.

Generally, AVMs ingest different data points and use different methods of calculation to produce an estimate. Due to these variances, along with other influences that can impact a property’s sale price e.g. emotional drivers, we typically see AVMs producing a ‘range’ or a confidence rating to caveat the accuracy of the generated predicted selling price.

Most AVMs on the market don’t have access to the most up-to-date sales data in order to make their calculations. However, REINZ’s unconditional sales data provides a key advantage and therefore increases confidence levels in making accurate and informed valuation predictions.

The REINZ ‘next generation’ AVM can generate sale price predictions using a multitude of data sources such as historical sales records dating back to 1991, recent council valuations nationwide, historical valuations from councils, census data, house price indices and more. Using complex methodologies, it then feeds data about the property, together with metadata about the quality of this data, to produce a predicted sales price for that property.

The new REINZ AVM will cover more properties in the market and provide:

• more accurate estimates that are

- closer to actual sales prices

- within a narrower range

- with less time lag to detect changing trends.

It will achieve this by:

• Using more data point inputs

• Using more sophisticated models and algorithms

• Using more up-to-date data

• Using machine learning to continuously improve.

From guiding vendor and purchaser expectations, to being a local market expert, having an accurate understanding of the current value of a property is one way of ensuring that you have all the important data you need. With the REINZ AVM available in the Statistics Platform and PropertySmarts, members will be able to access the brandnew AVM data at their fingertips through our established channels.