Michael's Real Estate Column

There has been some recent discussion about, and media interest in, the size of new houses, and do we need as many large houses. Associated with this is the environmental sustainability issue, particularly in relation to water, energy, insulation, wastewater, vegetable gardens and composting.

When I trained as a Registered Valuer in the late 1970’s the “Modal House” (This means most numerous rather than arithmetic average or mean) was used to assess building costs. The Modal House was 93m2 (1,000 sq ft), and was a typical “Group House” of the 1950’s – 1970’s. Andrew Street, Churchill Avenue etc in Feilding contain many “Modal Houses.” They were 3 bedroom homes with separate lounge and combined kitchen/dining, having 1 bathroom, and separate toilet. The arithmetic average floor area including all large houses was I believe about 107m2 in the 1970’s.

By 1992 the average size of new houses built had grown to 151m2, and by 2010 the average was 200m2. There are of course a large number of modern houses of 250m2 floor area and above.

The question of whether they need to be this large or not is personal and relates to affordability. There have always been some large homes.

A distortion that existed in my opinion at the time when smaller houses were being built in large numbers, was that the Government subsidised people into new homes through cheap loans. It was often easier for first home buyers to build a new home than to buy an existing home. This skewed the market for many years. In recent times it has predominantly been the more affluent who have built, and first home buyers have acquired existing properties, as a generalisation.

Will the increasing house size trend continue? I think it will reverse a little as affordability becomes a more major focus, and we live in a less affluent world.

Kind regards, Michael Ford

As we all know, the Auckland residential real estate market is flying, with the median sale price at $535,000 across the entire city, and $920,000 for Eastern Suburbs. This has a major influence on the New Zealand residential real estate market because Auckland represents approximately half of NZ by value. The national median is now $389,000 for December, or $385,000 when calculated over 3 months. It was only $355,00 in January 2012 for NZ, $471,000 for Auckland and $815,000 for Eastern Suburbs in Auckland, so you can see the dramatic increases.

The rest of the country, excluding Christchurch, is less dramatic, with Feilding starting and finishing 2012 on $246,000, and Palmerston North starting 2102 on $269,000 and finishing on $265,500. Levin’s median is $180,000, Wanganui’s is $184,000, and Rangitikei’s is $140,000. Our markets locally are flat in relation to value movement, however there is a shortage of properties listed for sale, which ultimately leads to upward value movement in classic supply and demand economics. Feilding’s sales volume has been quite strong for 3 months which is encouraging, and there were more houses sold in 2012 than 2010 and 2011. Our market is steady and improving.

Kind regards, Michael Ford