Brian Anderson The Western Front www.sunlive.co.nz

The council's new property revaluations are worrying for a number of reasons.

My bank manager a couple of years ago told me that most of his customers still owed 90 per cent of their mortgages. In the early years, most of the payments go on interest and very little on capital. If properties drop in value by ten per cent, owners would have so little equity that refinancing, if it were ever needed, would be impossible.

An economics advisor has recommended any owners in the situation where their debt exceeds equity and they are having difficulty with repayments should seriously consider handing their house over to the bank, walking away and renting.

There would be very few households in the Bay that would be in this situation, but consider many of the rural properties, orchards and farms where their valuations have dropped more than 25 per cent.

In fact, many sales figures recently are more than 35 per cent down on CV. This doesn't leave much room for the rural owners to move and walking away from their properties would not be a simple process.

I heard a local farmer who had been through a number of downturns advise his friend to read the paper every day and stop spending. When asked why reading the paper would help, he said that you are not spending when you are reading. Despite the cynicism in the advice, it is true that we are all going to have to do our homework on the property market and assess our lifestyle options.

How much is your house actually worth? It is unlikely to be what you paid for it or the investment you thought you had two years ago and the true market value is unlikely to be the rateable value that has just arrived in your letter box this week.

Property rateable valuations are just numbers used to share the burden of next year's council debt equably between different sections of the community. The new valuations mean that next year, the farmers will have a smaller share to pay while urban dwellers will be hit harder. The actual increase in the total rate take in the next round is yet to be calculated.

This year we have been given a significant rate increase and next year it could be worse. The council has confessed that they were more than a million dollars short for paying interest on the current loans. Much of council debt will have been capitalised, which means the debt bill will have already risen and repayments will have to rise to match it.

Council has identified that our problems are related to the Global Financial Crisis and Psa, but is a little short on admitting council financial mismanagement. If we are to start experiencing the promised international austerity measures in our rate bills, council is going to have to be more open in its finances and transparent in its operation.

The draft long term plan is due for consultation early next year. This is the time when the council should be acknowledging its current situation and presenting a three year budget as part of a ten year plan. This should include details of its new financial plan and indicate council's intentions on how they are going to reduce their debt. We all will be looking for key words like ‘spending cap' and reading about it in the newspaper. It looks like we will be doing plenty of that.