The New Zealand Herald’s cover story last Friday was quite sensational: “Homeowners in Auckland’s fringe saving up to $50,000 a year“. But while the eye-grabbing headline was worthy of clickbait merchants like Buzzfeed, the underlying analysis was not so good.

Here’s the key point of the article:

Bayleys calculated the first-year mortgage repayment costs for different suburbs based on median house prices from the Real Estate Institute of New Zealand (REINZ) and the ANZ variable rate of 6.74 per cent.

It found the annual cost of servicing a mortgage for a median priced Orakei or Remuera home ($1.35 million) was $84,060 in the first year.

In Pukekohe, where the median price of a home is $500,000, the annual mortgage repayment in the first year would be $31,128.

Even factoring in the $4032 annual cost of commuting from Pukekohe to the CBD by train on the At Hop card system – as well as the $768 public transport cost from Orakei to the city – living in the southern suburb was about $50,000 cheaper.

This is not entirely wrong. Housing costs do tend to decline as you get further out from the centre, while average transport costs tend to increase. That’s exactly what I found in a research paper I wrote on the topic last year. But it’s not entirely correct, either. Bayleys and the Herald have made two elementary errors in their analysis.

First, they’ve chosen a misleading measure of housing costs. House prices aren’t a realistic measure of the true cost of living at a point in time, as they are influenced by a range of short-term and long-term factors. In particular, when you buy a home, you are actually buying three very different things:

In other words, looking only at house prices is like arbitrarily including the cost of Kiwisaver into your housing costs.

My intuition is that rental costs are a better indicator of housing costs. They’re certainly less volatile, as I found in a recent paper that I co-authored on the relationship between rents and prices in Auckland. One of the key findings in that paper was that rents were quite low relative to prices in inner-city and coastal suburbs. As the following maps shows, median rents are only around 1/3 to 1/2 of median mortgage repayments in Remuera:

Nunns, Hitchins and Owen indicative rental yields 2013

It’s not as though data on rents isn’t available. The Ministry of Business, Innovation and Employment publishes quarterly data on average rents for new tenancies, broken down by suburb, dwelling type, and number of bedrooms. So let’s take a look at that data instead. According to MBIE’s data, the average weekly rent for a three-bedroom house was:

  • $754 in Remuera (or $39,000 per annum)
  • $406 in Pukekohe (or $21,000 per annum)

However, there were a number of cheaper options available in Remuera, and the inner suburbs in general. Going down to two bedrooms would reduce your rent by $9,000 per annum – a viable and attractive option for many households – and looking for flats or apartments would save even more money.

But basically, looking at the rental data shows that most of the cost of buying in Remuera is not related to housing costs per se – you’re actually buying the expectation of capital gains. The rent data shows that it’s still possible to save money on housing costs by living further out, but the magnitude of savings is far lower.

Which brings me to a second major flaw in the Herald’s analysis: They have only accounted for the monetary costs of commuting further into the city centre and completely excluded the value of people’s time. A quick look at AT’s journey planner shows that the train trip from Pukekohe to Britomart takes about 70 minutes, while a public transport trip from Remuera to Britomart takes 20-30 minutes depending upon whether you’re closer to the train station or a bus route.

In other words, the Herald has assumed that people don’t mind spending an extra 80-100 minutes commuting every day. They haven’t even tried to account for the cost of wasted time. Most researchers and transport economists disagree with this approach. Here, for example, is a discussion of the subject from Charles Montgomery’s great book The Happy City:

[University of Zurich economists] Stutzer and Frey found that a person with a one-hour commute has to earn 40 percent more money to be satisfied with life as someone who walks to the office. On the other hand, for a single person, exchanging a long commute for a short walk to work has the same effect on happiness as finding a new love…

Daniel Gilbert, Harvard psychologist and author of Stumbling on Happiness, explained the commuting paradox to me this way:

“Most good things and bad things become less good and bad over time as we adapt to them. However, it is much easier to adapt to things that stay constant than things that change. So we adapt quickly to the joy of a larger house because the house is exactly the same size every time we come in the front door. But we find it difficult to adapt to commuting by car, because every day is a slightly new form of misery, with different people honking at us, different intersections jammed with accidents, different problems with weather, and so on.”

In short, the Herald’s analysis has:

  • Overstated the real magnitude of financial savings from living in Pukekohe vs Remuera by a factor of three – a comparison of rental data suggest that the financial savings are actually $16,000 per annum or less
  • Ignored the non-monetary costs of commuting extremely long distances, which makes people miserable. All else being equal, people should be willing to pay more to live in the areas which have the best job accessibility.

Bertaud urban structure graph

My advice, if you are choosing where to live in Auckland, is to disregard the advice of real estate spruikers such as Bayleys and the Herald, and take a more objective and comprehensive look at the topic using the app developed by my co-worker Alex Raichev. The app provides information on a much broader range of factors, including the rents, the monetary and time cost of commuting, and the costs of car ownership. Here’s a sample:

affordability-org-nz screenshot

And, as always, my advice to the Herald is to check the facts more comprehensively before committing this sort of thing to print.

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  1. Great article. Love the considered thought and research that has gone into it. Especially when compared to the Herald!

  2. And simply stupid to compare Remmers to Puke. It’s no surprise that the most expensive suburb Auckland is the most expensive.

    Why not compare Otahuhu to Pukekohe instead?

    1. Its 50k more expensive to live closer to the city – as long as you choose the highest possible interest rate, one of the most expensive inner city suburbs, ignore any capital gains, ignore the time cost of commuting, etc.

      1. “The highest possible interest rate”?!?!?!?
        Oh dear god are you delusional.

        I haven’t owned a house that long (< 15 years), but I've paid over 8%.
        My parents paid over 20% at one point.
        One of our company directors STARTED at 21%. He paid their mortgage off in 5 years by keeping their repayments at the same level when the rates dropped under 15%.

        “Assumption of capital gains” is an ASSUMPTION.
        You are taking a risk there. And that risk increases with increasing economic instability, and with declining population growth.

        The rest I pretty much agree with.

        1. The highest possible current rate. A better choice would have been TSB’s ten year 5.89% rate which takes interest rate change possibilities out of the equation for the next ten years.
          You can’t guarantee capital gains, but I think it would be reasonable to consider an inflationary (CPI) capital gain which should be offset against some of the interest payments. If you put money in the bank the real gain is interest minus tax minus inflation, the real loss on a loan should be interest minus inflation. Of course it is difficult to predict future inflation.

        2. Hi Roger – you’re dead right about the riskiness of housing investment. I think this is something that people understand quite poorly. If you’re buying a house in the anticipation of prices always rising 5-10% a year, you’re _also_ taking on the risk that they will flatten or decline. There is no such thing as a risk-free profit.

          A pair of Harvard economists wrote a book on financial crises with the fantastic title: “This Time Is Different: Eight Centuries of Financial Folly”. ( One thing they highlight, as the title suggests, is that people _always_ think that their market is special, that things couldn’t _possibly_ go wrong.

        3. Of course there is a risk house prices could go down or stay stable – but why arbitrarily assume the house price will stay the same over time (which is actually an inflationary decrease in value)? Surely it would be better to assume that the house price will increase in line with the reserve bank’s CPI target of between 1-3%? If you assume 2% capital gain and say a 5.65% 5 year interest rate the yearly loss is only 3.65%, not 6.74%. Then if you choose two more comparable locations I think you will find the difference is much less than $50k

  3. I’m reminded of a survey I heard about from someone. I can’t quite remember the exact details, but basically people were showed a picture of a terraced 3bdr house and a standalone 3bdr house and asked which one they preferred – almost all chose the stand alone house. Then they were told that the terraced house was in [a suburb close to Auckland CBD] and the standalone house was in [a suburb in the outskirts] – and then a large majority chose the terraced house.
    Does anyone know the real details of this survey?

      1. That looks like some fascinating research… thanks Greg, we’re going to have to take a good look at that!

      2. Thanks for the link Greg! Interestingly, some local researchers are doing an Auckland-specific version of this study. I’m looking forward to seeing what they find.

        1. That must have been what I heard about because I’m sure it was based in Auckland (someone I know got asked the questions)

  4. Completely agree. Rents are best measure of housing costs (another reason why demographia analysis is flawed). Nonmonetary costs of housing also crucial.

  5. I had exactly the same thoughts about the “research”: “Well of course a real estate firm isn’t going to show that you’d save the most money by renting somewhere with good transport connections.” After looking at houses on and off for the past few years, I decided to opt out of the “real estate industrial complex” last year, and found a nice place to rent in a central suburb at maybe half to third-thirds of what I would pay for a mortgage on a house in the same street. Bank, real estate agents and the NZ Herald all have a vested interest in perpetuating the myth that you must get on the property ladder however you can, but until more people say “these prices are absurd” and simply walk away, prices are going to keep going up.

      1. I think most people who read the original “story” with half a brain would come to the same conclusion it seemed fabricated.

      2. ‘Twas always so. After a recommendation on ATB I read James Belich’ book, “Replenishing the earth”. The history of property spruiking in the press since early colonial times is fascinating, as is the picture of how boom-and-bust is ingrained in our economy.

  6. I read that article online and thought WTF, especially the Warkworth example.

    I used to live in Whangaparaoa as we were able to afford to buy our first house there. I liked the location at the time when bringing up young kids, and both my wife and I were working relatively close by on the Shore, but when my children started at high school I did a careful analysis looking at transport costs versus housing costs. The low interest rates meant that a few years ago, we were able to borrow the difference between our house in Whangaparaoa and a house within walking distance of a good high school and service the additional costs for the cost of transport. What killed the cost of living in a fringe suburb, was that the cost of commuting by PT rises per person; so when we got to 3 of us taking PT daily, the cost was 3x greater than just me.

    The cost obviously also included the time that commuting took; I didn’t mind my commute so much, but having my high-school children spending 2 hours per day on uncomfortable/crowded and inflexible school bus routes that make after school activities very difficult, does make the decision to commute long distances harder

    Looking at the Warkworth example given, where the cost for the child was ‘only’ $600 a term or $2400 a year on top of say $140 per week, then with one child taking the bus, the cost per year is about $10K – or enough to service $150K additional cost of a house closer in, even using ANZ 2 year fixed rates. Individuals make choices, and I understand that people might want to live somewhere like a lifestyle property, but to pitch it as economical sense to live in Warkworth, I think is a stretch.

    The interesting thing to me at my stage in life with high-school age children, is the importance that schools have on the decision where to live. Unless I have missed some high-rated schools, Pukekohe and Warkworth are not noted for great schools, and if you make a decision to send your children to a private school like Pinehurst (at about $15k per year) because of that, then it might make a more sense to spend $750K+ and buy in zone of a well rated public school.

    1. Hi Grant, thanks for chiming in with your story! It’s great to get a view from someone who’s tried to juggle family life across quite long distances.

      One thing that this does show, I think, is that different living arrangements may work better at different points in someone’s life. It’s important to plan not just for one type of living!

  7. i think the herald are just very poorly equipped when it comes to dealing with numbers of any sort. they need a stats guy and a better economist to review.

    1. They are building a quite good data journalism team that regularly features work like Aaron Schiff’s innovative visualisations and the tool. Unfortunately, that doesn’t seem to have raised the game elsewhere in the newsroom.

      1. Maybe these people are too focused on visualisation and haven’t got the right background to understand the mistakes they make when interpreting the meaning of the numbers into English. The ones that feature statistical analysis are the most irritating and frequent. Pretty much every single Herald article with stats has got the interpretation wrong, and disconnected from the numbers themselves. Their appreciation of variability is very low, they can’t pick the signal out of the noise. A prime example: the numerous articles on foreign tourists’ propensity to generate accidents.

        1. My favourite is the reporting of political polls. Given the average margin of error of +/-3% on most polls, the headline should _almost always_ be: “Nothing has changed since last week”. Instead, it’s always “Such and such party is up 0.5%” plus a bunch of wank about the impact of what so-and-so said last week.

  8. You’ve got to forgive the Herald, they’re the print version of Nationals PR machine and it was bloody helpful of them to pour some water on the smouldering resentment that is building over Auckland’s property market.

    Very informative research by yourself however.

  9. Grantblk’s comments rang a bell with me, because if you had high school age kids, then you’d actually save quite a lot of money by renting or living in Remuera [or other close in suburbs]
    – as you’d be in the Grammar Zone(s) for your kids.

    So you’d save the cost of sending kids as “out of zone” students to those schools – assuming they could even actually get places in the Grammar Zone schools, that is, as out of zoners.
    In zone you’d be taken no matter what. And your kids would also need to factor in the commute costs of them going to/from the Grammar schools.

    A lot of parents place a lot of emphasis on ensuring their kids go to “good schools”.

    Another set of factors the old Granny Herald overlooked in their analysis.

  10. The point both sides seem to be missing is that people are not stupid. They know there is a trade off. A bigger house further out with a longer commute or a small place close in with a shorter commute. For most people there is a life-cycle component. Live close in and put up with a shoe-box when you have no dependents on the basis that you are not there much and like to be close to the stuff you do (including your work). Move out to somewhere more suitable when you have some kids so they have schools, parks, a yard and people around them to play with. Most people with more than one kid will readily make the move further out and out up with the commute in exchange for a larger house and more amenity.

    1. I think the problem is that it will be used by the right as an argument for more sprawl (the Herald says its 50k per annum per household cheaper to have sprawl so lets build more)

      1. So what if it is? If people want to live there they will and they will have a longer commute. The problems only occur when people who think they know best try to impose their values onto others and try to prevent people from living on the edge of town. So far all that has resulted in is artificially high house prices. As for hectoring people that they can live in a cupboard in town for the same as a house on the edge of town well frankly that is far more arrogant than anything I have ever written on this blog. And that is saying something!

        1. I’m not against removing the limitations on housing, but I’d like to see it done fairly (allowing more density and sprawl). Then we can let people decide what they prefer (you will be surprised how many would prefer the ‘cupboard in town’).
          But using dodgy maths to push sprawl over density so the rich that own houses in the city don’t have to have ‘poor people’ living next door is not OK with me!

        2. “when people who think they know best try to impose their values onto others”

          You mean like NIMBYs in inner city suburbs who oppose changes in density rules and so effectively tell all their neighbours that they are not allowed to build higher density housing on the land they own?

          Or the NIMBYs who oppose public transport and cycling projects and so are preventing other people from travelling congestion free around the city?

          Or the people who assume that everyone wants the same thing for their family and children as them and so assume that low density housing on the fringes of the city is what everyone wants? And then use that to justify opposing changes to density rules?

          Yeah, they really annoy me too.

        3. Yeah those ‘Nimbys’ who expect to have daylight shining on their windows. Who do they think they are? Firstly where is the evidence that there is a shortage of apartments? Check out the development tracker- it seems to show that people who want apartments can find them. . Second do you really think house prices will drop just by getting rid of height to boundary controls in inner city suburbs or reducing lot sizes? Given that you can already infringe any of these controls with a non-complying application provided you don’t create adverse effects that are more than minor then how will changing the rules increase supply? Or are you suggesting let people create any adverse effects they choose? The problem we have isnt a shortage of apartments but land prices that have been inflated by regulation.

        4. “So what if it is?”, well, if this prominent article has a headline figures such as ‘Auckland fringe – save up to $50K’ and people may take away that message, but the headline figure I personally feel is misleading and based on very unrealistic assumptions. Comparing a $1.3m Remuera house with a house in Pukekohe, I think is really comparing two different markets. They are also using an interest rate higher than I (and most people?) are paying to get that $50k headline figure. Note that I don’t disagree that you can pay less for the same sized property in an outer suburb vs an inner suburb, but I think the comparison given by the Herald is unbalanced.

          “If people want to live there they will and they will have a longer commute. The problems only occur when people who think they know best try to impose their values onto others and try to prevent”
          There are some strawman being raised by you here.

          Nobody is imposing anything; I am just giving both my personal experience from having lived in an Auckland suburb, and the results of my (personal) analysis. Before we moved, I put together a spreadsheet and we made the move not only on quality of life, but also on objective calculations of house price vs transport costs. Not everybody would do that, but I am an analyst by occupation, so it is what I do.
          Just trying to add some balance to the Herald article.

          You also assume that the choice is a shoebox in the city versus a large house in the suburbs. Maybe some truth in the trade off, if you have a fixed budget of say $500K, but in my case the increment in price of around $200k brought a slightly larger section on the Shore, slightly larger house and with beach and more amenities close by. My kids walk to school and to the shops/mall, and commuting is very inexpensive in comparison.

          My wife and are already thinking about the next 10 years or so, when we will be in our 50’s, the kids have left home, our elderly dog is gone. We would prefer living somewhere smaller in the city, somewhere like Wynyard quarter or Ponsonby fringe with the ability to leave the car at home and eat out more. Given the developments taking place like sugartree etc, we are obviously not alone in this aim.

  11. I have so many thoughts on this and only 4 minutes to write so I won’t cover everything.

    House prices are a better measure because the proportion of our population that own their own house is higher than renters. Capital price changes in housing affect a wider spread of the population. We also agree as per previous posts on this blog that owning a house is more desirable for many reasons.

    I think the numbers used are a bit wonky, in particular the interest rate but the point of the article is maintained.

    For most of the population there is no option but to buy in the suburbs as they don’t have the necessary deposit to by closer in. For families renting is not a viable option given the need to access education and maintain stability for their children.

    Finally I disagree with the negative comments on commuting. When I’m commuting my time is not wasted, I’m listening to Larry Williams on the radio catching up with the latest business news and opinion from many of our leading figures. My time is better utilised than someone on a Wi-Fi enabled train who plays games. I also disagree that commuting is not an enjoyable experience which brings us to an interesting point regarding the infuriating stupidity of our road design which causes congestion rather than alleviates it. The latest example being a lighted pedestrian crossing on Ash St that leads straight to a Petrol Station. I kid you not!

    My 4 minutes is up

    1. “Finally I disagree with the negative comments on commuting…”

      You prefer being in your car; most people prefer other things. Assuming that everyone’s preferences match your own is a recipe for planning disaster.

      “infuriating stupidity of our road design which causes congestion rather than alleviates it”

      If only we could eliminate those pesky humans who keep getting in the way of our motor vehicles! If that’s what you want, I recommend you go get your jollies somewhere like this:

      The rest of us will continue existing in reality.

    2. 1) Why couldn’t you listen to Larry Williams while in a train? Your phone has radio, right, or you could probably even listen to it online? And you could even play games at the same time. Bonus! My utility function would probably compel me to switch Larry Williams off, but each to their own.
      2) For Auckland, home ownership is around 61% so there are certainly plenty of renters out there.
      3) If you enjoy commuting so much, wouldn’t you rather have more congestion so that you can spend more time doing it? Instead, you call it “infuriating”.

      1. Does anyone have statistics of how often people are evicted from rental properties? I have heard figures as bad as “every year”. Which, especially for a family, would not be viable by a long shot.

        1. I remember seeing some data on this in a report from BRANZ on the condition of rented and owner-occupied housing, available online at

          According to their survey of ~500 owner-occupied and rented properties, four in five renters had been in the same home for over a year. 38% had been renting the same place for over seven years. Only 19% of renters were planning on moving in the next year. Owner-occupiers do seem to stay in place longer, but the difference is not as large as some people think.

        2. Thanks for the info. Still, It’s not nice if you get unlucky and get evicted twice in two years.

  12. So pathetic of the Herald. Desperately trying to put a positive spin on our disastrous housing crisis. “Save $50k by living further out!!” – yeah right.

  13. A rental home is not equal to owned home in NZ due to our insecure rental rules. Especially for families.

    In the final discussion section of the following link there is several paragraphs discussing the detrimental transience effect on education due to unaffordable housing and insecure rent.

    More research is required but the evidence so far indicates this is a growing problem.

    1. Fully agreed! At least in the English-speaking world, house prices seem much, much more volatile than rents. They appreciate much faster, and fall much faster when bubbles burst. Given this, it seems pretty sensible to look at policies to improve the attractiveness of renting.

  14. I think the interesting question is why does it take so long to get from the edge of Auckland to the middle of it? At which point edge travelers have access to about half of the city.

    Or to rephrase it in Alain Brtaud terms. If the labour market can be increased so that more workers from their homes can access more work places in under 1 hour, with a peak gain in under 30 minutes, this increase in the labour market is statistically linked with higher wages and increased productivity.

    Why are we not doing more in NZ to make our urban labour markets more efficient?

    Auckland should be trying to copy places like Helsinki.

    When I lived in Helsinki, public transport could get me to most places at a rate of about 1km a minute, this being about the same speed as private vehicles. At one stage I was commuting to a particular school on the opposite side of the city -60km away and it took about an hour by train including the wait to transfer from one train to another.

  15. The herald likes to write attention grabbing news stories. The housing market is their go to. Its not clear their analysis was wrong. Yes it is a reasonable argument that housing costs should be measured by rents rather than prices, but they were explicit. They didnt ignore the costs of time, they just weren’t comparing that. They werent advocating people live in Pukekohe, just illustrating the substantial difference in costs. Indeed the very point of the article could be summarised as – if you are prepared to commute from Pukekohe, you can save yourself a bunch of money. Which is essentially correct.

    So they didnt even get anything wrong.

    I dont agree with your housing price rationale. House prices dont include expected capital gains. By definition anything included in the house price will not be capital gains in the future. House prices include expected increases in housing costs – which can be interpreted as increases in rent. So in fact the house price comparison may be more valid than the rent comparison over the long term as rents rise more in central areas than Pukekohe.

    1. “House prices dont include expected capital gains.”

      Obviously you’ve never talked to a real estate agent. When you ask them whether it’s worth paying $X million for a house in Auckland, they don’t say “you should buy now because otherwise your rent will increase 10 years from now”. They say “you should buy now because the value of this house will increase loads”.

      “Indeed the very point of the article could be summarised as – if you are prepared to commute from Pukekohe, you can save yourself a bunch of money. Which is essentially correct.”

      Overstating the magnitude of financial savings by a factor of three is _not_ what I would describe as “essentially correct”.

      1. I have never gotten advice about the economics of house prices from a real estate agent trying to sell me a house, no.

  16. It’s a no-brainer that renting is cheaper than buying, no-one would question that. Using the $1.3m Remuera house as an example, assuming an opportunity cost of 6% that’s $78k/yr, while rent will be around $52k/yr, a notional gain to the renter of $26k/yr. The wise renter will invest his windfall elsewhere, eg in a business, the foolish one will blow it on consumables.

    Of course, the landlord is wearing that $26k/yr loss, plus outgoings such as rates, insurance and maintenance. So why be a landlord? The short answer is that yield includes both current and future components, the latter otherwise known as capital gain (net of inflation). Assuming the landlord is not a trader, that component is currently tax free, but if it wasn’t the market would sort things out (eg push up rents). So the landlord makes a call based on present and future cash flows.

    Yield depends on many factors, but primarily the type and location of the property. Commercial property provides a higher current yield (typically 9% gross) than residential, as capital gain net of inflation for commercial is virtually non-existent. Apartments are a little better but not much. Stand-alone houses achieve the greatest capital gain, but with a current yield of around 5% gross (except in provincial areas where the capital gain is zero or negative but current yield is higher). If residential capital values in Auckland flatten out, as they might do in the foreseeable future, rents will increase to compensate. It’s all pretty simple really.

    1. > If residential capital values in Auckland flatten out, as they might do in the foreseeable future, rents will increase to compensate. It’s all pretty simple really.

      The other way for yields to get back to normal is for the capital value to drop even further! Rents can only go up as much as the market will bear. Even if the landlord of that Remuera house can put the rent up to, say, $60k/yr, the house will still need to drop $100k in value to give even a 5% yield.

      The question is whether it’s possible for rents to go up enough to provide a decent yield at current prices. If they can, well, house prices can stay where they are. If not, they have to either keep bubbling up or come crashing down. Obviously there’s going to be a degree of both rents going up and prices coming down, but how much of each?

      I suspect that if and when capital values stop climbing, high-demand areas like Remuera will keep their values, the last few remaining rentals will be sold to owner-occupiers at eye-watering prices, and prices will collapse only in renting-heavy areas. (Note how much worse this will make wealth inequality, by the way).

      1. Good points Stephen. Looking at your last proposition, this implies that the renting-heavy areas will start to follow the commercial model where price is a multiple of yield rather than the two being largely independent. Who knows! In my experience the trick is to maintain substantial equity (say 90%) so that you can weather fluctuations in both value and interest rates, ie always remain cash-positive. I’ve noticed that the highly-leveraged model is beginning to lose favour, which comes as no surprise to me. My other observation (FWIW) is that corrections occur in roughly 9-year cycles ( eg ’89, ’98, ’07), so will the next one be next year? Or perhaps 2017 if there’s a change of government then (which is highly likely).

      2. Another element to consider in this is the extent to which current prices reflect future rents from intensification of sites. If so yields could come back to normal without prices crashing or rents rising exorbitantly. It could be that the market has factored future intensification into current prices even if Council hasn’t yet allowed this though zoning.

        1. That may be true in some areas, but around here (in Grey Lynn/Ponsonby) many of the $2m+ houses are selling on sections that are around 200-300sqm smaller than what would be allowed under the UP for the area.

        2. I’m not talking about speculation on future rents that could be enabled from the Unitary Plan. The Unitary Plan barely allows any intensification. What I’m suggesting is that the market prices could be anticipating intensification despite the fact that the Unitary Plan doesn’t allow it.

        3. Yes the UP is very disappointing in that sense. I do wonder though if a rational investor would be pricing in something that is so uncertain in terms of future allowance for more intensive development- I would imagine the timeframes here are 10+ years. Especially when combined with a heritage overlay that basically says anything old has to be preserved.

        4. Markets are the sum of thousands of individual decisions, so in sum can have more information than any individual investor (I said ‘can have’ I realise markets can be irrational too). I’m not suggesting individuals are factoring this in to their purchasing decision but that the market price as a whole may reflect the potential for increased future rents through intensification.

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