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Which homes will hold their value best in 2023
Real estate agents and consultants comment on which properties are expected to hold their value this year.25 January 2023
As commentators expect house values to keep falling in 2023, albeit by smaller amounts than 2022, real estate agents and consultants out doing the mahi told us what kind of homes are holding their value and will continue to do so.
What you’ll learn:
- What buyers are paying top dollar for in today’s market.
- The most popular types of homes currently tempting buyers.
- Location is even more important than ever when it comes to home values.
Most popular features of a home in today’s market
In the buyers’ market of 2023, confident buyers with loan approval or with good financial situations are prioritising certain features in a home.
“Buyers are looking for houses with no problems, that’s what people want in a market like this,” says central Auckland Ray White agent Elaine Ferguson.
Family homes, for parents of up to three or four children, are always popular, and there should be more than one bathroom with a master suite. Properties should be on flat sections, ideally with good off-street parking and or garaging.
Indoor-outdoor flow to a garden rather than to a deck that drops down to a garden is ideal, adds Elaine.
“And layout is key. For example, the kitchen should be in the right place, so Mum can keep an eye on the kids,” she says. And if there’s a pool, that parents can see it from the house ideally.
Also in this market, a good street, security and school zones are all important, adds the Ray White agent.
Types of homes retaining value
As for types of homes holding their value in this market, townhouses or apartments aren’t as likely to do as well as stand alone homes, says Elaine. New townhouses that are being built too small, with tiny yards, aren’t attracting much buyer interest so won’t retain their value well, she says.
Good sized townhouses will hold their value better but they tend to be rarer as developers want to put as many townhomes on one site to get their investment back, says the seasoned Ray White agent.
The most popular era properties in Auckland maintaining their value are either modernised character, mid-century architectural or newly architecturally-designed homes, she says.
“Those homes holding their value are typically three bedrooms plus, two bathrooms, on a flat site, with parking, close to a bus route and cafe society,” she adds.
Homes with some kind of X-factor, a view or street appeal, will hold their value, predicts Elaine. Properties that haven’t been updated with some kind of flair are not exciting buyers, she adds.
The Ray White agent showed a buyer some homes in her Freemans Bay Ponsonby Grey Lynn market. And the client told her: ‘Don’t show me anything else that’s “many shades of grey,’ says the agent who is marketing a characterful two bedroom Victorian home in Ponsonby which is anything but grey.
30 Brown Street, Ponsonby, Auckland City, Auckland
Questions to ask about your home to test its value
Owners of homes that appeal to a broad range of active buyers will do best when it comes time to sell, says Nick Goodall, the head of research at CoreLogic.
“Does your home appeal to first home buyers, for instance? Where’s the competition for the home coming from?” he asks.
Meanwhile, location is key and has become more important when it comes to house values, says Nick. How well connected is the property? When you’re thinking about petrol prices, how well connected is the home to a bus route so you don’t have to drive too far?
“Is there access to schools? It’s all about connectedness,” says the CoreLogic research head.
When it comes to nice-to haves like garages and off street parking, people are still willing to cave on that, as long as they get other things, like space to work from home, he believes. “That’s still important, whether it’s an actual office or a room somewhere, that continues to be appealing,” says Nick.
Where Wellington market values are holding
In the Wellington market, where some of the biggest value falls happened in 2022, the pool of first home buyers is increasing, making families who are ready to trade up more confident that they can sell their starter family homes for a good price, says Alice O’Styke, an agent with Tommy’s Real Estate and a qualified valuer.
First home buyers are looking for homes with good bones which have had some cosmetic touch ups, she says. For those with more to spend, around the $2 million mark, there is still strong interest in good family homes which have double glazing and a modernised kitchen, she adds.
And land is still much appreciated in the capital. The agent has put an, at first glance, aggressive price on a nicely presented property in Karori but it has land and two titles for sale, she explains. Land is still the most important thing, she says.
107 Karori Road, Karori, Wellington
Location, location, location
David Nagel, Chief Operating Officer of Quotable Value, a valuation and property services company, stresses it’s more about the location of the home rather than the property itself when it comes to maintaining values.
From a nationwide point of view, home values are likely to fare better in more resilient markets such as Christchurch and Southland, as opposed to Wellington and Palmerston North, where the largest corrections have happened to date, he says.
And, within cities, homes in the more central suburbs are attracting a broader buyer pool, and this will help with their pricing resilience, says David.
“Most buyers want to be closer to the CBD so when the market is tough, it’s often a good time to buy in the better, more central locations,” he says.
As properties are more likely to retain their value where there’s a wider pool of buyers, this would probably exclude smaller apartments without garaging, explains the QV COO.
Although this may not necessarily apply in Auckland where there’s been a drive back to Airbnbs as well as a resurrection of the education sector. By contrast, three to four bedroom homes, might attract both owner-occupiers and investors, he adds.
Values at the upper end of the market have not been as affected, says David. And he sees this continuing in 2023, barring a recession or a rise in unemployment.
“The past 12 months have shown us that the upper quartile is showing more resilience than the lower priced stock. This is likely a reflection of the fact that tightening credit, interest rate hikes, and the rising cost of living are having less impact on the wealthy. Hence that top end of the market seems to be holding up relatively better,” he says.
Homes that pull on the heartstrings will hold their value
More generally, houses that pull at the heartstrings will always attract more competition, says Auckland real estate consultant, Lauren Davies. A California bungalow or a villa will appeal to a lot more people than a three bedroom brick and tile, for instance.
Character villas or bungalows will hold their value well, says the experienced real estate commentator.
Any property that ticks boxes and appeals to the emotions (a view, beautiful indoor-outdoor flow) is going to be one step ahead of the game, she says.
And while of course, a three bedroom home is preferable over a two bedroom one from a buyer’s point of view, Lauren says two bedroom homes where a third bedroom can be added will be appreciated by buyers. Is there a massive lounge room which could be divided and a third bedroom created? Or is there a good section that could accommodate a studio outside for extra office space, she suggests.
There are opportunities with these homes to not only retain value but add value to them.