Recent research figures show not all property is created equal…
A recent review of buying behaviour in Auckland and Northland shows a clear home buying strategy with three and four bedroom homes in hot demand. According to latest Bayleys Research analysis of Real Estate Institute of New Zealand (REINZ) data there is value to be found in bedrooms.
In the March 2018 quarter, the median value for a three-bedroom house in Auckland was $791,000. Sales statistics released by REINZ indicate that this figure is set to grow further, with the provisional figure for the June quarter sitting at about $810,000.
When it comes to four-bedroom houses in Auckland the projections are also positive. Figures from the March 2018 quarter show the median value for a four-bedroom in Auckland was $1,060,000. This number is also expected to rise, with provisional figures for the June quarter 2018 showing the median has reached approximately $1,100,000. Over the past 10 years since the June quarter of 2008, the overall increase for a four-bedroom house is 85 percent, and even more for a three-bedroom house at 92 percent as of the March quarter 2018.
It’s a similar story in Northland, with a clear growth trend for three- and four-bedroom homes becoming very apparent. In the March quarter this year the median value for a three-bedroom home was $440,000 and, based on the provisional REINZ statistics for the June quarter 2018, this is projected to reach around $460,000. Following the theme, four-bedroom houses in the region are also on the increase. The median value for a four-bedroom house in the March quarter 2018 was $609,575 and provisional figures show it’s expected to rise to about $650,000 over the June quarter this year. Statistics for the March 2018 quarter show residential values for three-bedroom and four-bedroom homes have increased over the past 10 years by a total of 40 percent and 60 percent respectively.
From the numbers it is clear that many of the pockets of activity running hot across Auckland and Northland involve three- and four-bedroom houses. It’s no secret that when buyers are looking at purchasing properties there is a range of factors they take into account, but the number of bedrooms is usually one of the top priorities.
Families require space and can relatively quickly outgrow their current house with the addition of more children – so having more bedrooms is particularly important for larger or expanding families.
Daniel Coulson, Bayleys National Residential and Auction manager, has seen it before and says the number of purchasers requiring more space for families continues to increase. But an extra room can also be used for a flatmate, which in turn can help to minimise debt and stress levels.
“Three- and four-bedroom properties also provide options for those taking their first or second step into the market. Their size allows for potential flatmates, which can help with the affordability,” he says.
A three-bedroom home is the perfect choice for younger families, and typically it is the target for many first-time buyers. A four-bedroom is often ideal for a second step up the property ladder when first-home buyers are looking to progress into their next home.
Naturally, having more bedrooms is of great importance to larger and growing families but it’s also important to investors as a property with more bedrooms will have wider appeal in the rental market. “Some lenders will also look at the potential rental income for a property, even if the purchaser is looking from an owner occupation perspective,” says Coulson.
INVESTORS KNOW BEST
Families are not the only ones looking for more bedrooms. Other savvy buyers can see the value in additional rooms too. Any investor naturally wants the most bang for their buck when buying a house and, put simply, often the more rooms there are, the more revenue that can be generated. Of course, investors want quality property that holds capital value and provides income streams. On the other side of the fence, renters too are often looking for a three-bedroom or bigger house and this is something investors consider. “Those looking for investment purposes know that the more bedrooms a property has, the wider its appeal will be in the rental market,” says Coulson.
IS IT STILL ABOUT LOCATION?
Quality of the home and the location will always be big factors when people are deciding to buy because the size of a house can be changed or altered over time. That said, there is value in purchasing homes with three or four bedrooms and the current research is proving buyers are aware that there is added value in finding a home with extra bedrooms.
ARE TWO-BEDROOMS STILL SELLING?
Three-bedrooms has long been a saleable configuration as it appeals to one of the largest segments of the market – families with children living at home. However, for buyers who are single, or couples looking to downsize, a two-bedroom is often the perfect space. That’s likely why two-bedroom houses in the Auckland region are still achieving solid rates. The median house value was $649,000 over the March quarter this year and provisional statistics indicate this is likely to go up to about $680,000 over the June quarter 2018 – continuing its steady increase.
Northland is a similar story. Buyers from out of town still outnumber local buyers, and they are spread across the entire market range. Two-bedroom homes in the Northland region continue to rise at a more modest rate after a solid run in value gains over late 2016 and early 2017 which at one stage saw median house prices almost reach those of three-bedrooms.
That said, Coulson says he can see no end to the recent trend of three- and four-bedroom houses selling well.
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