Valuing Your First Home

Market value is roughly what the house is worth in this market. This is what we consider to be the 'true value' of the house.

Real estate agents will often refer to the market/true value of a house as being "what someone is willing to pay for it". Though, if someone chooses to pay 600k for a house which most people would only pay 550k for, it's arguable that the true value of the house is what most people would value it at. If only a rare buyer would pay so much for the house, it's a bit hard to say it's worth that much, because if you went to sell it shortly after you could lose money. It might be hard to find similar buyer etc.

I have to say there is also personal value to the house, such as if you like it significantly more than other people, you may be willing to pay a little more. This depends a lot on whether you're likely to need to sell it soon (and possibly lose money) vs whether you intend to enjoy it for many years, so you will gain value from enjoying living in it.

The RV is the ratable value, it’s used to decide how much rates (tax) you pay to the council, based off approximate value of your house RELATIVE to other houses. It's renewed every three years.

It is NOT the true worth of the house. Sometimes it can help to indicate how a market is doing overall i.e. whether most houses are selling 'above RV' or 'under RV', would indicate that overall house prices have gone up/down. But for an individual house, it should be taken with a grain of salt.

How is it calculated?

The RV is calculated by the council based off broad information which it has on recent sales in the area, the size of the house, size of the land, consented works. It doesn’t take into account some other things which give the house value or detract from it such as renovations, house orientation, maintanence condition or special features such as views or a river.

This article by Smith and Partners is great for breaking down exactly what goes into an RV.

Real estate agents will tell you an interpretation of RV based off their own interests. If the house’s true worth is less than RV or equal to RV, they may try to tell you that the house is worth the price of the RV. If the house’s worth is above the RV, they may tell you the RV is meaningless.

Valuing the house yourself

Far more accurate than online valuations if you know the market.

For a particular house, looking for comparable houses (in terms of area, land size, floor size, bedrooms, age, renovations) which have sold recently is the easiest way to get a pretty good guess.

You can find similar houses sold within the past year in the area on https://homes.co.nz/.

We made a list of recently sold houses in the 2-3 suburbs we were looking in when we were looking.

Formal valuation

From a professional valuer, costs around 1k. You don't need this usually unless the bank requests it for lending. This is probably the most accurate option but can be expensive.

Home listing sites and online valuations

Free websites like homes, oneroof, propertyvalue will give you estimates. All these estimates are doing is taking basic features of the home e.g. floor area, section size, no. of bedrooms, garages etc, factoring in recent sales in the area. They don't take into account specific features of the house like it's exact location, specific renovations/features etc.

Homes: Owned by Trademe.

Oneroof: Owned by NZ Herald.

Propertyvalue: Powered by CoreLogic which is what banks use for desktop valuations. Possibly the most unbiased free source.

Relab is paid - I didn’t use this, but it’s supposedly quite good.

Real estate agents can apply to get the estimate value changed artificially on Homes or Oneroof. On homes, it says ‘agent appraised’ on the website for a few weeks but then the disclaimer disappears and the manipulated price often becomes the new homes estimate.

Always check realestate.co.nz for the sale history of a house. We saw a house where it had sold last year, but they had removed this on Homes so there was no indication of this. On realestate.co.nz it listed the sale price of last year.

Real estate agent appraisal

Real estate agents have knowledge of the market. Unfortunately, there is likely to be bias in an estimate they give, due to incentive to sell the house. An agent who wants to convince you to go to auction may estimate a lower price so you are more likely to go to auction (thinking it is well within your budget), and an agent doing a deadline sale may encourage you to pay a higher price (as this is their job, to get the highest possible price for the seller).

If the house has or doesn't have certain renovations, it's useful to factor this into the price you're willing to pay.

You can use our list of how much renovations cost as a rough guide.

Some renovations you don't get your money back e.g. doing the roof may cost you 35k, but most people won't pay 35k more for a house with a done roof vs one without. Some renovations like kitchen/bathroom may increase value as much as it cost. As a buyer, we stayed vigilant about the hidden costs of renovations - we valued unsexy things like a new roof, insulation, double glazing.

Renovated vs unrenovated

For us, despite common wisdom of ‘adding value’, we found unrenovated houses to be worse value than renovated ones (more expensive total cost if you add the cost of renovating it). If you can entirely do the renos yourself that is another story though (please do get the appropriate council consents for works that require this however, or you'll have more trouble if you ever need to sell the house).

Beware of a shoddily renovated house just done up to maximise the sale price (new paint over an old fence, old roof, really cheap kitchen (could be cabinet stickers!) and bathroom job (new lino and wall paint etc) rather than new showers, benchtops ovens etc.

New vs older house

New houses attract a high price but we feel they aren't worth it, and it's better to buy an older house which is renovated (or renovate yourself). Unless your main goal is wanting low maintenance which is valid.

The core build of a house lasts essentially forever if it's well built and maintained, hundreds of years even. Houses in France can last 700 years. We believe it is better to buy a well built 100 year old home than a badly built 20 year old home.

What you get with a new house is new renovations (updated kitchen, bathroom, roof, fences) and new housing standards (wall insulation, double glazing is mandated). Sometimes the layouts are a bit better in newer houses, but not necessarily.

Plus, a house that's newish may be due to have some things replaced soon e.g. a 2004 house is 20 years old, so the bathroom could still need work!

The other disadvantages of a new house tends to be lack of land, lack of off street parking, internal garage which inflates your RV and eats into your floor area.

Don't worry about EQ's - new detached houses aren't built much more earthquake proof, building regulations haven't changed much since 1960s for single level homes.

Below figures are very approximate ranges based off rough indications from builders late 2024/early 2025. 

Roof

• $25 - 35k

Bathroom 

• Basic: $20 - 25k plastic shower/lino floors

•  Premium: $30-40k tiled shower/floor

Kitchen

• $15 - 30k 

Wall insulation

• We're unsure of the cost of getting a builder to insulate a house. It is a simple but messy job - very labour intensive. It also require a building consent. 

• Potentially about $20k for a builder to do it in most rooms  

Double glazing

• $30 - 40k - significantly less if done by retrofitted existing frames (aluminium frames must be thick enough)

Large old tree

• $5 - 10k once it requires felling.  An arborist would be required (it's an intensive and risky job for large trees)

Fences

• Not usually too costly, however if the property has a large amount of fence it's worth considering (our house had a massive long driveway, so we budgeted 10k).

• A classic wooden fence costs about $75 to $120 per meter + labour costs. An average section is around 60 metres. A 20-metre wooden fence may cost $3.3k including labour. Source.

Get to know your price bracket and what houses tend to sell for in each. Sometimes you need different strategies in different suburbs, price ranges, etc.

Our observations in Christchurch 2024 (may be different elsewhere):

In the lower section of the market it's more competitive and you have to choose what's most important to you and what to compromise on - for nicer houses there will likely be a fair lot of competition.

In the higher end it seemed there was less competition but people moved fast on good houses, often deadlines were brought forward within a week of first open home for good homes.

Every bracket has investors/developers looking for deals. Some houses are more at risk of being snapped up by one (what we saw was - cheap houses on lots of land, particular suburbs like Spreydon which are close to town which are experiencing lots of development).

Avoid going to auction for a house that's good for developers - developers can often outbid first home buyers due to having deeper pockets and potentially being able to make money despite paying a premium (demolishing and selling units for profit).

What we felt made a difference for whether a house sold for a reasonable price (based off our ancedotal experience in a certain market):

• Efficiently used floor area and land - more floor area and land tends to inflate the RV

• RV is at or below what it's truly worth - if the RV is higher than what you think it's worth, chances are other people/the agent may value it at the RV (even though this isn't the most sensible way to use the RV)

• Vendor/real estate agent’s expectations - what they tell you they want

Be aware that for auctions they often underplay what price they think it’ll go for (to get more people bidding), and for a deadline sale they often overplay the price to get higher offers to choose from.

Just a wee note on capital gains - some people may encourage you to spend more on a house, with promise of 'future gains in price'. Realistically, this only matters if you own more than one house, as you will always have to live somewhere.

All I can say is that no one can predict the future definitively.

We saw some new builds where developers had put up a table of "projected price in 10 years" on the listing - pretty absurd, no one can make a prediction like that.