New research reveals 10% of Kiwi homes earned more in the last 12 months than the average worker.
OneRoof and its data partner Valocity identified 119 suburbs where the average property value rose by more than $66,196 – the median annual wage in New Zealand.
However, only a handful of suburbs could compete with the pay packets of New Zealand’s executive class. Seven suburbs saw value growth of more than $200,000 in the 12 months to the end of July.
Leading the pack was Whitford, in east Auckland. Property values in the lifestyle suburb grew $358,000 over the year. Second was Arrowtown, in Queenstown-Lakes, where homes earned on average $337,000.
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Rounding out the list were Herne Bay (+$264,000); Waiheke Island (+$256,000); Fendalton (+$233,000); Kelvin Heights (+$208,000); and Queenstown (+$207,000).
However, as big as those paydays are, they are at the bottom of the pay scale for New Zealand’s CEOs and managing directors, where salaries frequently exceed $1 million.
Value growth in Whitford was just 15% of the average earnings that CEOs in New Zealand's top-listed companies recorded last year ($2.288m), and less than 5% of the $8.42m pay packet of the country’s highest-paid CEO, John Cullity, of Ebos.
However, OneRoof also looked at house sales over the same period and found 225 homes that delivered their owners a gross profit of more than $2.288m. OneRoof also identified five resales that exceeded Cullity’s remuneration package.
One home, a grand mansion on Victoria Avenue, in Auckland’s Remuera, netted a gross profit of $18.6m after selling for $23.8m in July last year. The second biggest gross profit recorded in the last 12 months was $11.34m for an Italian-style stone mansion on Paritai Drive, in neighbouring Ōrākei. That house just sold in March for $21.84m.
OneRoof editor Owen Vaughan said the analysis highlighted two things. “Firstly, big paydays are years in the making, with the average hold period for the 225 properties analysed just under 20 years.
“And secondly, you need to earn CEO-type money to buy a home in the top suburbs. Most of the people who sold for big money bought for big money. The Victoria Avenue home at the top of the rankings was originally bought in 2003 for $5.2m – a large sum even back then.”
Wayne Shum, senior research analyst for Valocity, said while buyers in these suburbs were already likely multi-millionaires some had bought the property long enough ago that their gain was not as amazing as it looked on paper.
A sale in Point Chevalier from 2001 for $300,000, for example, was resold last November for $4.2m but that property was “literally a rebuild”.
Most owners would have put in new swimming pools, kitchens and bathrooms in the time they held them because homes at the top end tended to be generational assets held for 20 or more years.
Valocity senior research analyst Wayne Shum: "You've got a lot of equity built up from 20 or 30 years." Photo / Fiona Goodall
“That’s a generation – it’s basically a working life. You’ve got a lot of equity built up from 20 or 30 years, which gets you through to where they are in terms of the top 50, and they’re all in locations that are really sought after today, like Remuera, Ōrākei, St Heliers and Epsom.”
While some owners would be CEOs, more were likely to be business owners, and some of them owners of multiple businesses, Shum said.
Auckland has netted a lot of CEO/business owner-level sales. Of the top 10 in Auckland, Bayleys Remuera agents Gary and Vicki Wallace were involved in half, including the property at the top of the list – a grand home on Victoria Avenue, in Remuera, which sold last July for $23.8m, netting the owners a gross profit of $18.6m.
Wallace told OneRoof a high net worth individual had bought the property around two decades ago and had made extensive renovations, including adding a second pool and a tennis court: “I hate to think how many millions it cost him.”
While the dollar value might seem staggering, he agreed the sale of the house for $5.2m 20 years ago made it a high-end sale even then.
This grand home on Victoria Avenue, in Remuera, Auckland, sold for $23.8m last year, delivering the vendor a gross profit of more than $18m. Photo / Supplied
Another Remuera trophy home, on Aldred Road, sold for $12.8m - $9.9m more than what it last changed hands for. Photo / Supplied
“I do recall the property being sold and I do recall the previous owner. It was again another high net worth individual.”
Third in Auckland’s top 10 was another Remuera property, on Aldred Road, which was also sold last year by the Wallaces for $12.8m.
That one made the owners nearly $10m gross profit. The vendors had demolished a cottage on the site to build a classical, generous home of over 500sqm, and they built a four-car garage.
They, too, would have spent a “substantial” amount of money, Wallace said. Last year’s sale was to high net worth buyers who understood and appreciated the privacy it offered, he said.
While not every buyer at the top level was a CEO or business owner – sometimes money was inherited – Wallace said he met people from offshore who had invested in or worked in the tech industry.
“You only have to look at the American stock market now. The growth these companies are achieving – they start off as start-ups and all of a sudden they’re valued in the billions of dollars.”
That big wealth was reflected in the upper levels of the housing market, although he often did not know where the buyers’ wealth came from – and how they were going to fund the property was not asked or discussed.
Bayleys Remuera agent Gary Wallace says a lot of his buyers are high net worth individuals. Photo / Fiona Goodall
In east Auckland, owning in the rural lifestyle suburb of Whitford offered a level of status, said Daniel Wei, Barfoot & Thompson’s branch manager.
He consulted with Barfoot salespeople, some of whom had worked in the business for decades, who said along with status, easy access to Botany and Howick – about 15 minutes by car – and the Pine Harbour ferry trip to the CBD were big drawcards for buyers.
The suburb had entry level properties of $2m but also had plenty of $10m-plus sales to affluent people who were not affected by the current economic situation.
“It’s the kind of place where properties don’t come onto the market as frequently as you’d see elsewhere and with that if there’s a bunch of people that are interested in getting into the area when something that’s right for them finally comes up, firstly, they are probably in a financial position to be able to pull the trigger on it at what’s required.”
Buyers at the upper end were definitely in the CEO and business owner category and homes could be large with large pieces of land.
“The address is something homeowners can be proud to say, ‘yes, I live in Whitford, I live on this road in Whitford’.”
While most buyers were from east Auckland, Wei thought the suburb was gaining a status reputation outside of just east Auckland.
Arrowtown, in Queenstown-Lakes has seen phenomenal house price growth in the last year. Photo / Getty Images
At the other end of the country, Arrowtown, near Queenstown, was attracting so many wealthy buyers the demographic of the historic gold-mining town had changed, said Richard Newman, owner and principal of Bayleys Arrowtown.
He cautioned that Arrowtown was a small market and said the nearby resort of Millbrook, where $10m sales were regular, could skew Arrowtown’s statistics.
But even with Millbrook sales removed, his own statistics showed a 46% increase in average sale price on this time last year – that was huge, he said.
“I can’t give you dollar values but nowhere else in the country has gone up 46%. What’s happened in Arrowtown is the top end has shot up, whereas the bottom end and the middle are much the same.”
People who found Millbrook too expensive turned to Arrowtown, paying $3m for a nice home, but it was also no longer uncommon for people to knock down a $2m to build a $10m one.
“It’s not unheard of for Arrowtown to have $10m builds now, which is crazy. That’s just the house, right, and these are people coming out of Auckland, Sydney, Brisbane, the east coast of Australia, so they are bowling old cribs.
“It’s not common but it’s happening.”
Buyers were high net worth people, again CEOs or people with their own companies, he said. “When one comes, they bring their mates, which is rather nice. You’re getting Arrowtown turning into, I don’t know, a high-end Auckland suburb.”
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