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The meteoric rise of the leafy suburbs - Auckland

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  • The meteoric rise of the leafy suburbs - Auckland

    The meteoric rise of the leafy suburbs
    5:00AM Sunday October 28, 2007
    By Nicola Shepheard

    Joann and Jim Chang had 57 groups through their Epsom house for their first open home last weekend. Their four-bedroom 1980s house has a Government valuation of $1.17 million.

    But now that two of their children are at university, and the third is going to St Cuthbert's College, a private school, they no longer need to be in the grammar schools zone.

    "The children felt very sad when we started to sell," says Joann, "but we tried to explain to them this is business".

    Apart from grammar schools, the private ("independent") schools in this area are a strong drawcard. This area of mostly older homes is also benefiting from a swing to pre-1990s houses in the wake of the leaky-home crisis.

    The established, leafy burbs of Mt Eden and Epsom have trumped the rest of Auckland with a meteoric median property price leap of 53 per cent in just one year, according to new figures.

    But real estate experts expect price growth will stabilise at less breathless levels in coming months, as disappointing rental yields and high mortgage interest rates squeeze out investors - making way for first-home buyers.

    And, prices for units (generally two- bedroom) in some areas have already dropped, says one agent.

    Real Estate Institute figures say the median house price in Mt Eden-Epsom from sales in the three months to September 30 was $720,000, well above the $445,000 median for Greater Auckland.

    This compares with $470,000 and $395,000 respectively for the same period last year, and Auckland's median rise of 13 per cent. (The median is the midpoint: half the prices lie above it and half below.)

    However, far fewer homes sold in these suburbs this year, with sales volume down by 43 per cent.

    Mt Eden-Epsom encompasses Newmarket, Mt Eden, Epsom, Greenlane, Balmoral, Royal Oak and One Tree Hill, which fan out directly south of Auckland's CBD, and take in part of the sought-after "grammar zone" for Auckland Grammar and Epsom Girls Grammar schools.

    Newmarket and Epsom are also two of Auckland's four suburbs where the median price for a standalone house has cracked a million dollars.

    The 2007 edition of Where to Live in Auckland, out next month, gives Epsom five stars, Mt Eden four and a half and One Tree Hill (including Greenlane and Royal Oak), three.

    Said publisher Stephen Hart: "You can't beat an area close to the city with character homes and great school zones - all of the characteristics that will continue to attract high prices."

    The median price rise for this area over the past four years was 40 per cent, and Quotable Value data reveal cases at the upper end of the scale. One Balmoral house bought for $300,000 in 2002 sold for $825,000 this year - a 175 per cent profit.

    But experts say the speculators' bonanza is over. With high interest rates and rents rising far slower than property prices, rental returns off market value are a paltry 3 to 4 per cent. Some agents questioned the 53 per cent figure, suggesting it might have been skewed by a bloc sale. They estimated prices rose by about 10 per cent.

    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx