How much for fourth bedroom?
An increasing push to work from home could see fourbedroom properties become even more expensive, writes Susan Edmunds.
How much is an extra bedroom worth to you? New data shows it’s at least $125,000 in all of New Zealand’s main centres – and the premium buyers pay for a fourth bedroom could grow over the coming years if the demand for work-from-home spaces increases.
Research from data firm CoreLogic shows that Auckland buyers pay a median more than $350,000 more for four-bedroom houses than they do for threebedroom ones.
In Hamilton, Wellington and Christchurch, the price premium was more than $200,000, according to CoreLogic. Real Estate Institute data put it at $175,000 for Christchurch, $146,000 for Wellington and $173,000 for Hamilton.
Economist Gareth Kiernan said an increasing push to work from home could create further divergence in the market, making four-bedroom properties even more expensive compared to three-bedroom ones.
People who were able to work from home, and might be in the market for a bigger property because of it, were more likely to be in better-paid professional roles, with more job security, he said.
They would be the people who might be expected to make it through the Covid-19 downturn in better shape than those in retail, hospitality and construction – who could not work from home and might not have the same need for office space.
That could create a shift in the housing market, he said, as the competition for bigger homes pushed their prices up while smaller ones were the subject of less demand.
Bindi Norwell, chief executive at the Real Estate Institute, said one of the most common requests from post-lockdown buyers was for houses with an office or study.
‘‘According to REINZ sales data over the last 12 months, the cost of moving from a three-bedroom home to a four-bedroom home is quite an expensive move and might be more than people initially anticipate.
‘‘Although it depends on the properties and the circumstances, in Auckland City you may expect to pay an additional $380,000 for an additional bedroom and around half that in Wellington and Christchurch.
‘‘REINZ’s data is based on actual unconditional sales prices as opposed to perceived values of a property, which is why the figures are a little higher than the CoreLogic research suggests,’’ Norwell said.
Kiernan said it made sense that the premium was bigger in dollar terms in Auckland because of the city’s higher prices. Auckland’s central suburbs are also predominantly made up of older houses, built in a time when a fourth bedroom was unusual.
Senior property economist Kelvin Davidson said, over the past year, smaller houses had had more of a price increase than larger ones, particularly in Dunedin.
‘‘One important factor for general outperformance is simply that three-bedroom properties are cheaper, hence more affordable for more people.
‘‘Overall, the general message is that it still remains pretty expensive to get that fourth bedroom or study in many parts of the country, and this could help to explain why ‘movers’ have been relatively quiet lately in terms of their market share for property purchases.
‘‘Of course, already-high debt levels are likely to have played a role too, and given that alterations and additions activity has been buoyant, some are clearly choosing to renovate rather than relocate.
‘‘This option will also get cheaper/easier given the relaxation of consenting rules around projects such as car ports and sleep-outs.
‘‘That said, there are always opportunities and as the recession bites harder in the coming months, there may be some ‘bargain’ four-bedroom properties available.
‘‘For those with job security and a loan approval, it could still be a good time to trade up. On the flipside, that also means people thinking about downsizing could be looking to take the opportunity too.’’