For most Kiwis, buying a multi-million-dollar luxury home is the ultimate Lotto dream. But the joy of owning a mansion can quickly become a financial nightmare, with agents at the top end of the market telling OneRoof that the rates and maintenance costs can easily hit six figures.
New Zealand Sotheby’s International Realty agent Paul Sissons, who recently sold a mansion on Auckland’s Paritai Drive for more than $20 million, said many of his buyers would be aware of the costs involved.
“Most people understand a luxury home comes with relationships - with the pool guys, the gardener and the guy who does the hedges,” he told OneRoof.
“Some will ask for running costs, such as the average power bill in winter or summer when you’re running air-con and a pool.
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“For all my listings, I draw up a manual of 'how to drive the house’. Not just the alarms, or which plumber, but how to run the fountain, who the stonemason is, who did the building.
“With my Paritai Drive listing, the manual ran to three large folio boxes, all beautifully labelled with comprehensive how-to photos. One was just for the keys and swipes, as there were entrances just for the tradespeople. Another box contained a list of all the service people who had knowledge of the house.”
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Barfoot & Thompson agent Paul Neshausen, who sells trophy homes in Auckland’s wealthy bay suburbs, told OneRoof some owners have teams of three or more gardeners working for several days every week.
“Then there’s the pool guy at $120 a week, the security monitoring and call-outs. The tennis court needs annual re-sanding, weed spraying and tensioning the net. Even just to replace the floodlight bulbs needs a guy in a cherry picker,” he said.
“Houses need window cleaners and house washing, moss clearing and gutters cleaning out, and that’s before you re-paint the older houses every few years. Those older Remuera houses need extra care – I had a client just had the old water pipe blow, and it was a $25,000 job.”
Just moving into the new place can see costs mount for high-end buyers, as they employ picture hangers to install the art and may need cranes to lift in the garden sculpture he added.
Barfoot & Thompson luxury agent Paul Neshausen: "Houses need window cleaners and house washing, moss clearing and gutters cleaning out, and that’s before you re-paint the older houses every few years." Photo / Fiona Goodall
A luxury home on Auckland's Paritai Drive sold earlier this year for more than $20m. The agent provided the new owners with three folio boxes of house instructions. Photo / Supplied
“Then house insurance is just massive, and that’s before you look at content insurance for the jewellery and art and car collections,” he said.
Rates hikes are also a challenge. Auckland Council recently put up household rates by around 6.8% and many residents in Wellington are facing increases of around 20%.
Wayne Shum, senior research analyst at OneRoof data partner Valocity, said there were plenty of multi-million-dollar homes in Auckland with five-figure rate bills. A few wealthy homeowners were even paying $100,000-plus a year.
“Then there are capital costs to be spread out over a period of time, such as house painting and roof painting, and special treatments/replacement of metal components exposed to salt air from the ocean,” Shum said.
“Some swimming pool surfaces may need a yearly maintenance of $1000 to $2500 and complete resurfacing every 10 to 15 years, that can be $12,000 up to $25,000.”
There is also growing anxiety around insurance costs, particularly for clifftop or waterfront homes. Only a handful of insurers specialise in luxury homes.
Andy Thomson, managing director of Construction Cost Consultants, told OneRoof that his company was always brought in by these niche insurers to value the replacement costs of the country’s most expensive houses.
He said the replacement costs for top architect-designed places can start at $20,000 per sqm. “That’s not uncommon. The most expensive we ever did was $65,000 per sqm for a house that was well over 1000sqm in size.”
Thomson said that luxury kitchens and bathrooms, sometimes costing $250,000 apiece, were the most expensive parts of the build to insure (although one insurance company balked at covering the cost of the owner flying to Italy to inspect her new kitchen before it was shipped, he said).
Finishes and features like stone and marble floors and walls, handcrafted wood floors and expensive doors, copper roofing and high-end electronic security and house running systems quickly add to the value of the house – and the insurance bill.
Less glamorous, but highly sensitive since last year’s floods and landslides were the underpinnings of the house, which all now need to be costed at today’s replacement standards.
“These days everyone’s really conscious of retaining walls and pilings, what's under swimming pools and tennis courts, and we have to look at what it costs today to get it up to today’s conditions. We have to know construction costs looking out to the next two years,” he said, adding that the annual premium would reflect such changes in building supply and costs.
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