Auckland Suburbs going up? What do I look for?

May 26, 2015 at 3:46 PM

About 18 months ago I was at a BBQ chatting with some friends about property. No surprise there, as with all the hype that Auckland property has at the moment, as soon as a Property Manager enters the room the conversations always ends up with house pricing.

I recall discussing how the city would naturally expand, and a friend who was looking to invest was asking what to look for.

I used the example of Otahuhu. I said "this is a suburb well located to motorways, and the train lines. It is close to large industrial sectors, it is bordered by good suburbs, and has relatively low social issues." I tipped it to rise, and said that many of my investors were snapping up property in this area.

I thought nothing of this really, until I stumbled upon this article the other day. It shows that the suburb is flourishing, with prices exceeding $600K. The example they use is a renovated bungalow on a ½ site. Of corse, being in the media this is an ‘over the top’ or extreme example, but it got me thinking…. What should I look for to spot the next hot suburbs to invest in? I narrowed it down to 5 things that are most important.

Location Location Location

If you take a compass, set your pin in the middle of the Auckland CBD and draw a 15 or 20km radius (depending on your budget!) You will get the first indicator of where to look. I have done it on this map, you see that Otahuhu, and Mangere Bridge just squeeze in. This is your first indicator; distance from the CBD.

Transport links

As any Aucklander will tell you, it is not the distance from the city as much as the ‘distance from the motorway’ that matters. In this case, look at the nearest on ramp to one, or ideally two motorways. Secondly, look for secondary access roads that are 4 lanes all day. This is second best thing to a motorway in Auckland. Lastly, how close are you to a train line? If you have the trifector of these, your property will always be in hot demand, and therefore pricing should increase over time.

Style and Era of Buildings

Everyone has been a bit dumbfounded with ‘Grey Lynn’ pricing, and understandably so. I am not dead keen on paying close to 2 million for a property located 1m from my neighbours on either side! But there is a lesson in this, what Grey Lynn has is the largest congestion of 1900’s Villas in Auckland. The character, and opportunity to “Restore Former Glory” is a big driver for the prices of this suburb. If your suburb is predominantly state housing, (done around the 50’s, its square boxes and two storied semi’s) your area will be slower for growth. An example of this is Sandringham Vs Mt Roskill. Literally one street over will gain you $200 - $300K more for your property just for being on the right side of Mt Albert Rd. Part of this reason is the style of the buildings in the streets.

Geographic expansion

History tells us that suburbs surrounded by large “Green Field” development opportunities will be slower to increase in value. The logic here is about development. Grey Lynn for example cannot increase in size, (and in most cases cannot subdivide). This means that there are a set number of properties; if people want to invest or live in that area they have to buy one of the existing houses. However, if you look at Albany, you could buy a house that is 10 years old, or one that is brand new a few streets over, which would you take? Because of this, it lowers the rate of increase.

State Housing & Social issues

This is sometimes an intangible. State housing exists in all suburbs, (there is pensioner housing in Grey Lynn, Freemans Bay & Kingsland) and while the existence of this does not bring the value of the suburb down as a whole, it can for the street it is on. Large clusters of state housing means that the value of rents stay lower, (because they are controlled) and state housing don’t have the same selection process as private landlords which can sometimes make for some interesting neighbours. The best thing when you are looking at an area, is drive down the streets. The humanitarian in me feels that it shouldn’t, but the Social Status of the tenants and owners of a suburb will contribute to its rate of increase.

So let’s look at our example. Otahuhu falls within 15km of the CBD as the crow flies. (Coincidentally if you take Great South Rd it is 15.1km by car!) So we tick that box.

Off and on ramps exist for SH1, as well as Great South Rd which runs straight through the suburb. A 6 min drive through Favona will get you to SH20, and the trains run right through. So we definitely tick that box, as you can see Otahuhu is one of the more well connected suburbs in Auckland.

Otahuhu has a range of building styles, but there are a lot of Grand old Ladies (as Real Estate Agents would put it) due to it's history as a Blue Collar suburb when it was initially built. It also has a good range of weatherboard houses, so has escaped the “leaky home” labels that is often associated with some areas. You only have to look at the Historical Otahuhu College building to see that there is some beauty in the buildings of this suburb. We tick that box too!

Geographically Otahuhu is boarded by water on one side, and the motorway on the other. It means that there are no green fields, and little room for expansion beyond what is already in place. So we tick this box too!

Lastly, State housing and Social Issues. With its neighbouring suburb “Otara” having most of the State Housing in the area, and some of the “Bad Wrap” that the media puts on South Auckland, Otahuhu is one of the more family oriented suburbs in its area. This means lower crime rates, lower vandalism and more. So I think we tick that box box too! So 5 out of 5, boxes it is no wonder that Otahuhu has had such a rate of increases.

Where are you looking to buy that fits this criteria?

Ashley Giles

General Manager

Wendell Property Management

Tags: Auckland Property Investment Property Buying Investment Property
Category: Buying an investment property