The suburbs that have earned more than most Kiwis

Home-owners who bought five years ago in Auckland's fringe suburbs could see paper gains of more than half a million dollars if they sell up now.

OneRoof and its data partner Valocity has identified the parts of the country that have seen the biggest dollar value gains since 2014 - and those that would take a hit.

Of the suburbs examined, the biggest dollar gains were all in Auckland. Dairy Flat came out top, with the research suggesting that home-owners who bought in the suburb in 2014 and sold now would enjoy on paper a net gain of $685,000. That's $145,000 more than what the average household would have earned in the same period.

The next biggest gainers are Clevedon, in the city's south, with paper profits of $502,000, and Lucas Heights, in the city's northern fringe, with $444,000. Herne Bay, long New Zealand's most expensive suburb, saw a net gain of $440,000.

OneRoof editor Owen Vaughan says: “The top performers in Auckland are typically fringe suburbs that have seen rapid growth and new development. Five years ago Clevedon was viewed as an affordable area. Homeowners who bought there in 2014 would have been able to secure a large home for around about $750,000, which would have also meant a smaller mortgage compared to pricier parts of the city."

The research by OneRoof and Valocity measured the dollar gains in Auckland, Wellington, Christchurch, Tauranga, Hamilton and Dunedin by comparing median suburb values in 2014 and 2019. To get the net gain figure, OneRoof deducted the cost of servicing a mortgage over the five-year period. The formula took the 2014 median suburb value, and based on that figure factored in a 20 percent deposit and 30-year mortgage at an interest rate of 5 percent. The finance costs did not include rates, insurance, repairs and maintenance and other operating expenses.

Valocity director of valuation and innovation James Wilson said: “While median values are typical of what’s bought and sold in a suburb, there will be variations in what each individual property will have gained since 2014 – or cost its owners."

Other winning suburbs in Auckland include Paremoremo, Shamrock Park, Drury and Coatesville, which have seen net gains on their position of more than $400,000. Wai O Taiki Bay, next to Glen Innes, saw a gain of $348,000, while Campbells Bay saw a net gain of $307,000.

In Wellington, Berhampore, Newtown, Granada and Aro Valley buyers made paper gains of around $200,000 while Tauranga buyers in Mount Maunganui or Ohauti netted around $170,000, similar to that of Hamilton's Flagstaff buyers.

But some suburbs have not fared as well.

Buyers in Kumeu and Oratia who’d bought in 2014 have actually forked out more in their mortgages than they will have made in capital gain.

Kumeu median values rose just $80,000 in the last five years, but by the time finance costs are added up, a buyer at 2014’s median value of $1.125 million would have a net paper loss of $210,000. Similarly, Oratia buyers would have had a $190,000 improvement in value, but with costs, that’s a $12,000 loss. A 2014 Birkenhead buyer has a paper gain of $235,000 but by the time finance costs are counted, that’s only $53,000 net.

Wilson says that buyers are not just measuring capital gains, but suggests that digging harder at the mortgage is a way of improving net position by reducing the cost of finance.

“You can’t look back at where you should have bought, there are too many other factors,” he says.

“It’s never been easy or cheap to buy a home; you still have to live within the budget you can afford at each stage in your life. Stats New Zealand figures last year show that the ratio of housing costs to household income has remained relatively steady at $16.30 for every $100 of income.”