Some property commentators (and investors) look at the data the Real Estate Institute release and proclaim that it doesn’t matter where you buy …
properties go up roughly the same amount no matter what the region.
One economist released a fantastic piece of analysis that showed over the last 28 years, Gisborne house prices went up at the same rate as Auckland
house prices.
And that is absolutely true when looking at the data from a regional level.
However, you’re not investing in an entire region. You’re not investing in one town. You’re investing in one specific property, within one suburb,
within a town that’s within a region.
It’s of no comfort that the median house price doubled in 10 years if it takes 18 years for the property you invested to double.
The trouble with blanket average analysis is that it masks the enormous variation in capital growth that happens within regions.
For instance, over the last 20 years, the fastest-growing suburb in the Wellington Region, Cannons Creek, grew by 9.43% per year. That means house
prices doubled roughly every 7.6 years.
On the other hand, the slowest growing suburb, Wellington Central, only grew by 3.81% each year. That’s 18.9 years on average to double in value.
Had Wellington Central house prices grown at the same rate as Cannons Creek, property owners there would be $859,553 richer.
What does this tell us?
Where you invest matters. You can’t just buy property anywhere and hope.
To get a sense of the trends, we’ve recently been crunching data to identify trends in where property prices have increased the fastest around cities.
Take a look at the map of Christchurch below, which shows capital growth by suburb.
The redder the dot on the map the...
