Source: Kelvin Davidson, Cotality NZ Chief Property Economist
The cost to ‘trade up’ to a larger home remains significant across the country, but recent market movements suggest now may be a more favourable time for aspiring upgraders.
It’s never been cheap to move up the so-called property ladder – such as buying a house with more bedrooms – and even after some falls lately, the ‘trade-up premium’ is still $100,000 or (significantly) more across the country. However, past experience suggests that a flat/soft property market can be a good opportunity to trade up, and of course mortgage rates are currently down, while there’s plenty of choice out there for buyers too. ‘Movers’ remain a group to keep an eye on in the coming months.
One way to measure the potential costs facing a homeowner looking to ‘trade up’ is to look at the difference in median values between three-bedroom and four-bedroom houses – this equates to the extra debt and/or equity that needs to be found.
Now, it’s not a perfect measure; some people might see trading up as getting the same-sized house that’s newer or in a ‘better’ suburb. However, getting extra space would certainly be how many households view a trade-up.
How has the trade-up premium changed lately?
Using the Cotality Market Tr
