What’s your resale value?

Likely to be your biggest asset and a nest-egg for retirement, the ultimate resale value of your home is a key consideration that is best explored at the initial time of purchase. Bayleys property reporter Katharina Charles investigates how key growth areas contribute to an optimal resale value.

Likely to be your biggest asset and a nest-egg for retirement, the ultimate resale value of your home is a key consideration that is best explored at the initial time of purchase. Bayleys property reporter Katharina Charles investigates how key growth areas contribute to an optimal resale value.

As a popular strategy for wealth creation adopted by many New Zealanders, purchasing residential property is seen as a pivotal life achievement, and a significant investment into your retirement.

Whilst previously the home was primarily considered a haven, more Kiwis are looking to their property as equal parts home and hard-working asset.

Yet our city is changing, with approximately $29 billion forecast spending on transformational infrastructure projects over the next decade. Designed to produce new roads, new rail and new amenities, modern living choices are constantly evolving too; evidenced by the growing popularity of apartment and townhouse developments.

So just how does one make a smart property purchase today, that will still show value to buyers in 10 years or more?

Housing developments

Born from the need to offer modern housing alternatives to satisfy a growing urban population, the development of new residential neighbourhoods across Auckland and Rodney has been both swift and prolific, aimed at keeping pace with the some 84 percent population increase the region has experienced since 1990.

Locales which were once green fields, orchards and underutilised land have been transformed into entirely new communities with associated roading, schooling and amenities which provide modern necessities for residents.

Locales which were once green fields, orchards and underutilised land have been transformed into entirely new communities with associated roading, schooling and amenities which provide modern necessities for residents.

Purchasing a brand-new home in an emerging area offers a great number of benefits, not least of which is the fact that homeowners are the very first to reside in a contemporary home which has been built to the latest building standards of warmth and efficiency.

New homes are also subject to mandatory warranties which since November 2004 have applied to all building contracts. These warranties, commonly referred to as builder’s guarantees, ensure that issues including weathertightness and structural defects will be repaired for up to 10 years, and the warranty is also transferrable to any new owner who purchases the property within that time.

Buying a new home off-the-plans also offers a degree of flexibility as homeowners are able to alter floorplans, concepts and fittings prior to construction in order to personalise the space and transform it into their dream home.

This however, can be a double-edged sword as when we’re talking about resale value it’s worthwhile to note that a bright red kitchen or tinted glass frosting mightn’t be to everyone’s taste. So, carefully contrasting your vision for the home with its ultimate saleability is in some cases advisable.

Associated infrastructure

Across Auckland new residential housing subdivisions have created communities and dictated the progression of surrounding development.

Hobsonville Point in Auckland’s west has become one of New Zealand’s largest new communities providing more than 25 hectares of parks and reserves for new residents while Stonefields south east of the city centre has encouraged commercial prosperity in neighbouring Mt Wellington which is now thought to be one of New Zealand’s strongest local economies.

In the north, subdivisions such as Fairview and Unsworth Heights have facilitated the construction of new schooling and public service amenities, while Flat Bush in the south has graduated from a subdivision to the country’s most ‘comprehensively planned new town’ with boundaries spanning some 1,700 hectares expected to house 40,000 people by 2025.

One of the many benefits of these new subdivisions is the value gained from residing in an emerging area where extensive infrastructure projects funded by both the private and public sectors will add value to the land.

Take both Unsworth Heights and Fairview Heights in Auckland’s north east, predominantly constructed between 1999 and 2005. In the year-ending January 2000 the average sale price of a property in these subdivisions was around $240,000 - very closely following the line of the Auckland average which was $230,000.

Fast-forward to 2020 following construction of the new Westfield Albany with 49,000sqm of retail and 21,000sqm of offices; new schools Albany Junior High and Albany Senior School; new medical facilities, Northcare Accident and Medical and incredible roading improvements which include State Highway One to Warkworth and State Highway 18 to Waitakere.

After benefitting from this substantial investment into the area, the average home in these communities sold for $1.1 million, some 26 percent higher when compared with the Auckland average of $875,000 and which is 1.3 times the average housing inflation.

Preferable zoning

Whilst not discounting the value of a quality property, Auckland Council property valuations which dictate the rates payable by homeowners are made up predominantly by an estimate of an address and its land value – after all, there aren’t any companies producing more earth.

After many years at the centre of the debate ranging as to the affordability of Auckland’s housing, the Auckland Council announced that the Auckland Unitary Plan (AUP), which proposed a comprehensive growth strategy achievable through rezoning portions of land, would become ‘Operative in Part’ (AUP OP) in November 2016.

These changes have supported the creation of new urban areas which are characterised by boundaries, height allowances and density rules.

“Changes under the Auckland Unitary Plan Operative in Part have paved the way for a new generation of homeowners to measure value”

Changes under the AUP OP have paved the way for a new generation of homeowners to measure value, for example, the flexibility offered by the ‘Mixed Housing Urban’ zone permits greater density and construction of houses up to three stories (commonly townhouses).

Purchasing a property with a view for resale within this zone could offer the owner future growth options such as subdividing the property, or on-selling the land to a developer who could pay a premium for the location as it perceived as being in a preferable zone.

Similarly, character or heritage homes located within the ‘Single House’ zone provide value for homeowners seeking a standalone property with the assurance that future development will not alter the DNA of the existing community.

Given that value is subjective and often in the eye of the beholder, it is always advisable to seek professional advice as to your options when it comes to purchasing property, be it old or new.

However, as planned infrastructure and continuing new construction shapes the future of our region, it would appear that when considering the ultimate saleability of your biggest asset, the improvement of public spaces, prospective municipal developments such as schooling, roading and hospitals as well as employment opportunities are key factors which increasingly hold influence over resale value in the evolving residential market place.

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