Expert says look beyond average property prices
For many aspiring homeowners, the first hurdle in their journey is the daunting average house price. Numbers like "$2.2 million in Remuera" can send shivers down anyone's spine. But property experts warn: don't let the average hold you back.
“It is expensive, and many would go, ‘I’d never be able to afford a property there’. But that's just the average. In fact, one property in Remuera I looked at over the last year sold for $730,000,” said Opes Partners economist Ed McKnight (pictured above) in a recent Property Academy podcast.
While the Remuera property may be a two-bedroom unit, it goes to show that there are affordable options even in premium suburbs.
“My point here is that sometimes people will look at the average house price in a suburb, a city, or in New Zealand as a country, and think that’s what I need to aim for,” McKnight said.
“But that’s not actually true. There are cheaper houses than the average and there are more expensive houses than the average.”
A property case study: Remuera
Located four kilometres from the Auckland city centre, Remuera is noted for its affluent houses and its quiet tree-lined streets.
According to realestate.co.nz at the time of writing, the median asking price for homes in Remuera over the last 12 months was $2.29 million, while the average sale price was $1.92 million.
But just like any suburb, city, or country, there are nicer areas and there are areas that are not as nice.
If you look at the most expensive street, Victoria Avenue, which is in the grammar zone, the median sale price over the last 12 months was $4.8 million.
“You’re talking about some stately five-bedroom homes,” said McKnight. “But if you think about the same suburb, there are some streets that are far, far cheaper.”
“If we think about Monteith Crescent, around the edges of Remuera, the average sale price was only $1.2 million.”
While it’s still just above the average sale price in Auckland, which is just over $1 million, McKnight said the fact that it’s close could make people re-evaluate their options.
“People would say, well if I’m in Auckland and I can afford to buy a house for $1 million, it’s going to be on the outskirts. Maybe you don’t think about Remuera. But if you jumped onto Trade Me, One Roof, or realestate.co.nz to see what was there, I think some people would be surprised.”
“Only $1.2 million for Remuera. While it may be on the outskirts, and it’s not the nicest street, it’s no Victoria Avenue, but it’s actually starting to sound affordable by comparison.”
Of course, homebuyers would need to fork out a little more if they wanted the perks. The more expensive options in Remuera are closer to the water, closer to the main shopping strip, and in the double grammar school zone.
But if those are the characteristics that are driving demand in the area, you may be able to purchase a property for quite a bit cheaper if it’s just a street or two away.
The key takeaway: Location, location, location
While the specific property that sold for $730,000 was an older house with a smallish kitchen and lounge, McKnight said the property is still in a “really, really good suburb” and with a bit of love, could be worth quite a bit more.
“It’s about location, location, location,” said McKnight. “Whether you live in Auckland or Northland or Wellington or Christchurch, the thing that people often get hung up about is what is the average property price rather than the property they can afford.
“Don't get discouraged by that, because that's just the average. There might be many, many more cheaper houses that are available to you at the time.”
