Value of Backyards: Why Smaller Might Be Better for House Value Growth

Discover why homes with smaller backyards may actually be more valuable in the long run. Explore the surprising trend in real estate market.

When it comes to property investment, the common belief is that properties with more land tend to increase in value faster than those with smaller sections. However, new data from property insights firm CoreLogic challenges this assumption. While properties with more land are indeed more expensive, the growth rates of smaller properties are proving to be just as impressive in some cases.

In Auckland City, properties with over 300sqm of land have an average value of $1.17 million, while properties with mid-size sections (300sqm to 599sqm) are valued at $1.54 million. Larger sections (600sqm and above) have an average value of $1.68 million. Interestingly, the growth rates of smaller properties have outpaced those of larger properties in recent years. While smaller properties have seen an average annual growth rate of 4.6%, larger properties have only grown by 3.6% per year.

In Christchurch, the difference in growth rates between smaller and larger properties is minimal, suggesting that the value of land may not always be the primary driver of property value appreciation. The affordability of smaller properties may be a key factor in their increasing demand, as buyers opt for more affordable options in a rising market.

Ultimately, the size of the land may not be as crucial a factor in property investment as previously thought. Buyers are advised to focus on finding a property that meets their needs rather than paying for more land than necessary in the hopes of a higher return on investment. While a big backyard may be desirable, its financial impact may not be as significant as expected.

The value of a property is determined by a combination of factors, with the size of the land being just one consideration among many. Buyers should prioritize their needs and preferences when making a purchase decision, rather than solely focusing on the amount of land attached to the property.