Some suburbs hold their values better than others, even in downturns.
Remuera, an established blue-chip suburb in central Auckland near good schools, rail and with easy motorway access, is one of those suburbs.
It’s hard to go wrong if you are able to buy into Remuera or if you need to sell there, says James Wilson, director of valuation for OneRoof’s data partner Valocity.
“Remuera is an old suburb and it’s been that way for a long time in terms of it has that cross-section of housing stock. It’s not a new suburb that’s still finding its feet and where it fits in the wider Auckland market.
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“It’s always used as the litmus test for how strong the market is – if Remmers is down, watch out. It’s always been a canary in the coal mine suburb for how the market is performing.”
And Remuera is down – for the last quarter values fell 4.3% – but Wilson says it’s still one of the best performers in the country in terms of how small its value shrinkage has been.
The fall for wider Auckland is 5.8% for the same period, and the Auckland region is down 12.1% from the peak in December last year.
Wilson says according to trends over the last few housing cycles, Remuera and similar suburbs tend to fare better.
“By that I mean they don’t usually dip in value as deep as other fringe markets do when things are softer, and they also don’t stay soft for as long.”
This three-bedroom, -three-bathroom penthouse on Remuera sold last month for $12.77m holds the record for the country's highest-priced apartment sold at auction. Photo / Supplied
One of the reasons is the scarcity factor – there are not so many properties on the market and people want to be in the central ring location, so when properties do come up for sale they tend to sell quickly and well.
Another reason is the suburb’s diversity in terms of the types of housing stock it offers. Contrary to popular belief, Remuera is not only made up of multi-million dollar homes sitting on big sections.
“You’ve got apartments, you’ve got attached townhouses, you’ve got new-builds, you’ve got old character homes on large sites, you’ve got properties with extensive views and/or water views, so you’ve got a market that represents almost the entire cross-section of New Zealand.
“Investors therefore love it, believe it or not first-home buyers love it because there is entry-level property around there, retirees love it, mums and dads love it for the school zones.”
As a result, whether the market is hot or soft the suburb is still desirable, Wilson says.
That makes it different to fringe locations which might be more prone to surges where perhaps investors are active, or a property boom push up land value, or where perhaps there are a lot of new-builds which have come on stream.
When markets turn, those areas can soften rapidly and stay soft for longer, says Wilson: “We don’t have that ‘I can’t sell this property because the market has gone soft’ affect in Remuera.”
Chris Farhi, head of insights for Bayleys, agrees Remuera that is a pretty safe bet, saying it’s one of a small number of blue-chip suburbs in Auckland with well-established brands.
There are a number of large properties along the northern slopes in a well-defined suburb with a long history of people wanting to move there.
“You also have a scalability with the size of properties where you can go from anything from townhouses and apartments right through to some very unique and large-scale properties.”
Over the last couple of decades suburbs like Herne Bay, New Zealand’s most expensive suburb, and neighbouring St Marys Bay, have also established themselves as very desirable locations, Farhi says, and areas like Ponsonby have more recently come on in popularity.
But Remuera is a prestige suburb which has been established for longer.
Farhi also says another factor in Remuera’s stability is that across the city there has been a “flight to quality” with people preferring to buy into the very well-established areas – but he says that doesn’t mean you can’t go wrong buying in Remuera.
Valocity head of valuations James Wilson says house values in Remuera don't stay soft for long. Photo / Fiona Goodall
“You always have to be careful when buying any property because there’s a whole bunch of different things that could happen both at a market level but also in relation to specific properties.”
In terms of resale, though, Remuera is not likely to go out of fashion.
Farhi says the northern slopes tend to command premium prices as opposed to other parts of the suburb, including apartment developments which tend to be higher spec’d there.
A case in point is the sale of a three-bedroom, three-bathroom penthouse on Remuera Road last month ago for $12.77 million, which Farhi says is New Zealand’s highest-priced apartment option to date. The three-bedroom, two-bathroom penthouse has sweeping views across the city.
Barry Thom, a director of UP Real Estate, points to Remuera’s amenity value as the main drawcard but says the over-rider is the suburb is inside great school zones – the double grammar zone along with St Kentigern’s primary, Kings and Epsom Girls.
“All those top schools are within a kilometer or two of just about anywhere. It’s all part of the one package in my opinion. Obviously, there are some incredible homes, there are some beautiful character homes and land holdings and all those things, but there’s beautiful homes everywhere – I think it’s the amenity value, the underlying amenity value that drives it.”
Remuera is one of only a few aspirational suburbs but people don’t break in there for “snob value”, Thom says.
“I’m not sure that’s how people roll these days. I think it’s more about the value of being in the area and what it does for your lifestyle.”
Kelvin Davidson, chief economist for CoreLogic, says Auckland’s upper-end suburbs are as good as you will get in terms of being safe suburbs to buy in.
“I’d never say anywhere is totally safe but wealthy people buying in prestige suburbs are less affected by mortgage rates and tight credit conditions.
“Okay, there might be some price falls in those suburbs on average but for trophy properties if somebody wants it they’ll pay what the vendor wants.”
Queenstown, which is holding up well while most of the country is falling in value, has similarities but for different reasons.
“The motivations will be different in Queenstown – that’s going to be more about ‘this is a cool place to live, I like skiing in winter’ as opposed to Remuera being more about your day-to-day living and getting your kids into the right schools.”
