Matua resident Ian Watson says he's lucky to have bought his house when he did. Photo / Andrew Warner
Matua resident Ian Watson says he's lucky to have bought his house when he did. Photo / Andrew Warner
The Bay of Plenty Times is bringing back some of the best premium stories of 2020.
Multimillion-dollar homes are scattered throughout Tauranga but some houses are worth a mere fraction of the land they're sitting on. Cira Olivier talks to homeowners in Tauranga suburbs with the most expensive land.
Goodviews, quiet streets and proximity to the city are bumping up the prices of sections of land in Tauranga.
Data provided by OneRoof shows of 22 Tauranga's 22 suburbs 16 have an overall land to capital value ratio of more than 55 per cent.
The capital value is the likely price a property would sell for, which is a combination of the land and improvement, or house, value.
Jones had noticed land closer to the city had become more expensive as demand rose for the location.
This was particularly the case in areas where high-density sections were permitted, such as sections for apartments, he said.
Simon Anderson, managing director of Realty Group which operates Eves and Bayleys, said land values were driven by popularity and popularity was driven by desirability.
Bayleys Managing director Simon Anderson says land values are driven by popularity, and popularity is driven by desirability. Photo / File
Views, shorter commutes, and proximity to facilities and services like schools and shops added to the desirability of land.
"If you look at Matua, you can't replicate that land," he said. "Houses deteriorate, land doesn't."
Ian Watson has lived in Rewarewa Pl for 10 years after buying a home for $260,000.
The Tauranga City Council property valuation report of Watson's home states the capital value is now $725,000.
But the two-bedroom Matua house itself was worth only a fifth of that at $145,000 while the land was worth $580,000.
Watson considered himself lucky as he bought the home through a private sale after an elderly man, the previous owner, died and it was left vacant for six months.
He said he left a letter in the mailbox to express an interest in buying the property if it came on the market, and it did.
The high value of the land was explained through the view, he said.
"It's not rocket science."
This, coupled with the quiet neighbourhood and a sense of security, meant he could not see himself moving.
He had done renovations on the property which was "pretty run down".
Watson said being able to buy a good quality house in Tauranga was nearly impossible now. He saw it firsthand when his son bought a house, with his help.
"I spent three months, 40 hours a week just going hard on that place ... It was the only possible house he could actually buy."
It had holes in the walls, ceilings and smashed down doors and a flurry of other issues.
Watson said a lot of work needed to go into the homes that were the most affordable.
A few streets down on Beach Rd, multimillion-dollar properties fill the quiet street.
A home-owner, who did not want to be named, walked out to a clear view of Mauao every day from a house with a capital value of $1.65m. Of that, the house is only worth $160,000.
He said the house was "old and needs repairing".
The land the house sat on was worth nearly $1.5 million. When asked why he thought the land was worth so much, he stretched his arms out towards the bay.
"It's the view more than anything," he said.
In Tauranga South - the suburb with the second-highest ratio - retired woman Roselyn Lipinski owns a house with a capital value of $1.21m.
The three-bedroom house makes up $140,000 of that, the land is worth more than seven times the house.
She also owns the house next door, which her son and two grandchildren live in. The house makes up $100,000 of the property's $1.1m capital value.
"I would hate to buy a section now," she said.
Anton Jones, general manager for Tremains, Waikato and Bay of Plenty. Photo / File
"I wouldn't know where to live, this is so central."
She believed having shops, cafes, schools and parks in walking distance added to the value of the land.
The median price of land in Tauranga is $350,000 compared with $183,000 in Rotorua.
Land in Tauranga and Tauriko was the highest valued in the city.
The median price paid for a vacant spot of land in Tauranga is $857,000, and $700,000 in Tauriko.
The lowest median price for the land was $247,500 in Parkvale and $250,000 in both Hairini and Gate Pa.
Valocity insurance and valuation innovation director James Wilson said land was the largest driver of the overall property value.
"This is mostly due to the fact that land is a finite resource whereas the building on the property is not," he said.
But land value could be influenced by other variables.
"Such as water or lakefront property, you can witness the example of land values increasing rapidly as the demand for waterfront sites, which are scarce, increases."
Terms explained
* Improvements - the house. It is viewed as the improvement of the land. * Land value - the value of the land. * Capital value - the overall value of a property, which combines improvement values and land values.
