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Home / Business

Herne Bay homes make almost 20 times more money in one year than average city worker

Ben Leahy
By Ben Leahy
Reporter·NZ Herald·
26 Oct, 2018 04:00 PM5 mins to read

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How long would it take the average Kiwi worker to make as much as NZ's top-earning suburb?

A typical Auckland worker would need to toil away for almost 20 years to earn as much money as homes in Herne Bay made in the past year.

The median sales price in the exclusive coastal suburb jumped $940,000 to $2.5 million in the 12 months to June 2018, according to Herald analysis of Real Estate Institute of NZ data.

Based on those figures, a house in Herne Bay would take just 21 days to make what the average Aucklander would earn in a year, $53,872.

Yet Herne Bay was an outlier in an otherwise flat Auckland market, with most suburbs in the city seeing drops in their median sale price.

The losses were worst in Orakei where median sale prices fell by $720,000 to $1.31m and Freemans Bay, where values fell by $421,250.

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The median sale price for Auckland as a whole fell $5000 in the 12 months to June to hit $850,000.

By contrast the median sales price for Wellington and Gisborne rose $70,000 - more than workers in each region earned in the same period.

A standard Wellington home earned $42 more a day than a Wellington worker, while Gisborne homes made $61 more per day than workers in the east coast city.

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The Herald crunched the numbers by analysing REINZ median house price data and the latest Stats NZ income figures.

In recent years, house prices - particularly in Auckland - have risen so fast that capital gains often totalled far more than the average worker brought home in their pay packets.

But the new figures showed this trend had well and truly slowed as the typical Kiwi worker across the country made $50,908 in wages in the 12 months to June.

This was about $20,000 more than the typical Kiwi home, with national median sale price hitting $560,000, up 5.7 per cent on June 2017.

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However, in four of the country's 12 districts, homes still made more than local workers in the past year.

In addition to Wellington and Gisborne, this included the Waikato where homes gained $60,000 in value - or just over $10,000 more than the local worker's typical salary.

Hawke's Bay homes also gained $56,000 in value, which was just over $8000 more than median wage in the east coast city.

Outside of Auckland, homes in Wellington suburb Greytown rose $325,000 to a median price of $820,000 - meaning home owners had capital gains worth almost 15 times the yearly salary of a local worker.

Elsewhere around the country, however, house price gains were more moderate.

REINZ chief executive Bindi Norwell said regional prices continued to edge up "as demand for good housing stock continues to exceed the supply of houses".

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"Additionally, we're still seeing a number of Aucklanders, particularly first-home buyers, move to the regions where they can get more for their money," she said.

She said that unless this lack of supply was addressed, regional house prices were likely to "continue to increase in the short to medium term".

She also pointed out - that while back in Auckland most surburbs had lost value - there were still big winners alongside the home owners of Herne Bay.

This included those in Morningside where houses gained $396,000 in the 12 months to June to hit a median sale price of $1.035m and Oteha with a $313,000 jump in values to a median price of $1.125m.

According to separate data supplied by OneRoof and CoreLogic, the Auckland suburb of St Marys Bay has also been the biggest winner since 2008.

In the last 10 years houses in Saint Marys Bay earned $1.128m while the average Kiwi worker pulled in $486,604.

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It would take the average Kiwi worker 28 years to earn as much as St Marys Bay has in the last decade.

However, OneRoof editor Owen Vaughan warned that in Auckland's current flat market, high-value suburbs such as Herne Bay could easily see a flip between profit and loss as a result of even small changes in the market.

"For every Herne Bay or Saint Marys Bay that's enjoying huge gains there's another that's suffered big losses. Herne Bay is a case in point. Last June, its median sale price was $1,560,000, which could have been the result of a slow quarter or more sales of lower value properties in the suburb," he said.

"Of bigger significance are the huge gains seen in lower-value housing markets in the regions. Gisborne suburbs that earned more than the average worker will have seen more demand and market activity than Herne Bay, because the lift in median sales prices there will have come off a much lower base.

"These may be the suburbs to watch."

CoreLogic NZ senior researcher Kelvin Davidson added: "It's important to note that the growth seen in the last 12 months is only 'on paper' until the property is sold, and people often have to buy and sell in the same market, where everything has changed in value by similar amounts."

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