When it comes to understanding what Aucklanders value, the factors that determine house prices give us clear clues.
We all know that big houses on big pieces of land in desirable school zones are valuable.
But what matters most to Aucklanders?
Recent research by Auckland Council’s Chief Economist Unit reveals some obvious, as well as not-so-obvious, key insights.
Captain Obvious strikes again
Now that the Auckland Unitary Plan has been in place for three years, do properties with more permissive zoning have higher values? The short answer is “yes”.
But size matters when it comes to development opportunity and adding value.
Below 650m2 - regardless of the type of residential zoning, sections of this size have about the same value and not a lot of development opportunity, regardless of how it’s zoned.
Above 650m2 - Single House zoned land has the lowest premium once other factors associated with the zone, such as special character status, are removed as there is not much development potential.
Above 650m2 - the value of Mixed Housing Urban and Mixed Housing Suburban land starts to become differentiated, with the more permissive zoning having slightly more value.
Terrace Housing and Apartment Building (THAB) zoning allows for the greatest height and scale of development of all the residential zones – and not surprisingly, the most development opportunity. At 1200 m2, this has a massive premium (double) above and beyond Single House zoned land.
Finally, at any section size, sales of houses that are in business zones have the largest land premium. These have maximum flexibility and can be used for both housing or business activities.
Because money doesn't grow on trees
The most surprising discovery is that tree canopy in a suburb does not affect house prices.
This appears to be because the more modestly priced areas of Auckland, like Ranui, Glen Eden and Sunnyvale, have the same tree canopy as the wealthiest 'leafy-green' suburbs like Remuera, Parnell, Herne Bay and Epsom.
In other words, Auckland has a plentiful supply of tree-lined streets, green spaces and parks, and as a result property values do not attract a premium for this. The 'leafy-green' suburbs command higher house prices because of the additional amenities they offer. Specifically, close proximity to jobs and desirable schools; especially the double-grammar zone which adds a house premium of around 13 per cent.
A short trip to bring home the bacon
Aucklanders value living near jobs. Past research shows that Aucklanders are willing to pay to live near the city centre. With almost 25 per cent of Auckland’s jobs located within Auckland’s city centre and inner-ring suburbs, the 0.1 per cent land area packs a punch and is an economic and employment powerhouse for the region.
Research shows that for every 1 per cent increase in jobs in a suburb, house prices go up by nearly 0.03 per cent. In neighbourhoods near the city centre, the premium can be as high as 25 per cent or more, demonstrating the importance and value Aucklanders place on living close to where they work.
As Auckland’s urban development continues, the magic combination will always be planning to create housing close to employment as well as public transport networks.
Shane Martin, Senior Economist, Chief Economist Unit says his research findings are based on two years of new sales data to identify what Aucklanders value, as well as quantify how much these factors affect house values.
“We're privileged to live in a city that already has lots of green space, so when it comes to buying a house, we don’t see a premium for this. Suburbs we think of as wealthy, are wealthy for reasons other than their big beautiful trees.
“What really stands out as desirable and valuable for Aucklanders is the ability to develop their property and being able to commute easily to work.
“Of course, we all know these affect property prices, but this new data and research now shows us exactly how much.”
Read the full report
Read the full Auckland Economic Quarterly - August 2019 here: What do Aucklanders value? [PDF]
Auckland Economic Quarterly Reports