At Barfoot & Thompson’s auctions last week, two sales demonstrated the key divide in Auckland's central suburbs. Both homes on the auction block were similar in appearance, but one sold for $5.5 million and the other sold for $2.57m.
Why the big price difference?
The $5.5m property, a five-bedroom townhouse on The Drive in Epsom, is in zone for two of the country's top state schools, Auckland Grammar and Epsom Girls' Grammar.
The other, an immaculate 14-year-old four-bedroom house on Rowan Road in the same suburb, is located just outside the highly sought after Double Grammar Zone (DGZ).
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The listing agent for Rowan Road, Barfoot & Thompson's Robert Thompson, told OneRoof: “If my property had been 200 metres north, it would have got another $500,000, no question.
“These buyers would love to be in DGZ, but they don’t have another $500,000. This is a rock-solid result, quality sells anywhere, grammar or not.”
Thompson said four bidders competed to secure the home, which ended up selling for more than $700,000 above its 2017 CV.
Barfoot & Thompson agent George Fong, who marketed The Drive property said three bidders fought over the property.
“They wanted grammar zone. If there had been no fight, then maybe it would have gone to $4.5m to $4.8m, but we went over $5m.
Three bidders fighting to get into double grammar zone pushed the price of a five-bedroom house on The Drive, in Epsom, to $5.5m. Photo / Supplied
“Outside of zone, this house would get only $3.5m. The grammar premium is still $700,000 to $900,000 at this level.”
Ray White Epsom principal Heather Walton said that the properties that typically attracted the grammar zone premium were family homes.
At auction last week, she sold stylish seven-year-old five-bedroom property on Croydon Road in Mt Eden for $5.075m, well above its $3.3m CV. The house was zoned for Epsom Girls' Grammar but not Auckland Grammar.
A five-bedroom house on Croydon Road, Mt Eden fetched $5.075m. Photo / Supplied
“There were five bidders, then it came down to two bidders, but I would have lost buyers who really wanted double grammar. People saw the value - they wanted a modern home," she said.
“People know that re-sale value is improved, you’d get more than your private school fees back when you sell. Apart from apartments, the starting point for a house in grammar zone is $2m, if you can find it.”
Not all agents who sell in the DGZ suburbs of Remuera, Epsom and Mt Eden believe that the school zoning matters when it comes to prices and finding buyers.
Bayleys agent Gary Wallace said that the choice of in or out of zone had always been subjective.
“I always say Remuera is private school zone. It comes down to the specific property and whether it ticks all the boxes. They send kids to private schools, so whether it is in zone doesn’t matter," he said.
He said some buyers were wary of paying a grammar premium only to find zoning changes could exclude their property.
“It could change. You don’t know what could happen; the schools are under enormous pressure.”
Six bidders pushed the price of a four-bedroom villa on Bellevue Road, Mount Eden, to $3.235m. Photo / Supplied
According to the latest OneRoof-Valocity House Value Index figures, the average property value in the suburbs that sit just outside of double grammar zone have risen 6% in the last three months and 22% in the last 12 months.
By comparison, the average property value in grammar zone suburbs has lifted just over 5% in the last three months, and 14% over the year, but the growth figure improves to 6.6% and 17% when Newmarket and Grafton – two apartment heavy suburbs – are excluded.
In terms of value growth over the last three months, Remuera and Parnell are the stand-out grammar zone suburbs, with both registering lifts of more than 8%.
Remuera, where the majority of grammar zone transactions take place, has seen prices jump $263,000 in lockdown.
Ray White agent Mike Robson, who sold an in-zone four-bedroom villa on Bellevue Road, in Mt Eden, for $3.235m ($1.36m above CV), said the six bidders at the auction were after the community as much as grammar zone.
“It’s more about the house. There’s a premium for really well-presented properties, but even in the three or four weeks we were marketing the property, the market turned, buyers had a lot more options and if it’s not quite the right house, they’re not bidding.”
Ray White Remuera agent Steve Koerber said that while grammar zone was important, for some buyers being on Victoria Avenue primary school zone was equally important.
Koerber, who this year sold 70 homes in the blue-chip suburb, said he believed that emphasis on grammar zone was waning.
“I think it’s as much about proximity to the private schools here. I’ve noticed that DGZ thing tailing off this past year. Just look at the waiting lists for private schools - they’ve got big again.”
