WILL A POOL ADD VALUE TO MY HOME?


We get asked this a lot!
Some Real Estate Agents give the idea that adding a pool area

will not add value to your home!

These people are obviously misinformed, or haven't given it much thought,

and perhaps should consider an alternative career path!

Here is a simple example.

We kept it simple so these Real Estate people could understand what we are saying.


Auckland's property market: circa 2000 to 2010

In this example, there are two new houses in a new subdivision 10 kilometres out of Auckland Central. Let's imagine they are the GJ Gardner Design # 358 - a nice 240 square meter family home costing (in those days) around $900 per m2, or just over $200,000.

Add another $150,000 for a 600 m2 section, and this house would sell for $350,000 "brand new".

Mr Sadd purchased house #1 and the happy Gladd family house #2.

In the next 12 months, the Gladds added "improvements" to their happy family home.

They fenced the property, added a concrete driveway and double car garage. They bought a portable spa pool and pergola for it, and installed a Cascade "Jupiter" family sized pool.

They spent a total of $100,000 - bringing their total investment to $450,000 - and settled down for a happy life.


In the meantime, Mr Sadd spent NOTHING! No fence, No grass, No driveway, No Pool, No NOTHING!


Ten years on, both the Gladds and Mr Sadd decided to sell and move. The Gladds upwards, & Mr Sadd wanted to live in Morrinsville where houses are cheaper
!


Even assuming that the Gladds' $100,000 capital expenditure was reduced in "added value" to 50c on the dollar - or $50,000 - the following is the scenario most likely to occur in the Auckland region, which has been experiencing an average of 7.5% growth in capital value each year for the past three decades. (Many Valuers call us to ask what the pool & landscaping cost, and add THAT value to the house valuation)

Actually, in the years 2007 - 2014 the Auckland rate was
more like 12% per annum, but let's keep it simple
and assume the "110 year 7% Auckland average" annual increase
is to be applied here!


The left column shows the "Annual Capital Gain" figure, the next column the "Current Market Value". Remember that some older people without children or grandchildren may not want a house with a pool, and
some young buyers would prefer a cheap "do-er-upper" like the Sadd house so they could "improve it" and "add value".

A house with a pool is more likely to attract family buyers, like - well ... yourselves!

The Gladd's house started at the "new" improved valuation of $400,000 (The original $350,000 + $50,000)

Year #1: Mr Sadd #2: The Gladds
  Annual Capital Gain Current Market Value Annual Capital Gain Current Market Value
2003 $26,250.00 $376,250.00 $30,000.00 $430,000.00
2004 $28,218.00 $404,468.00 $32,250.00 $462,250.00
2005 $30,335.00 $434,803.00 $34,668.00 $496,900.00
2006 $32,610.00 $476,414.00 $37,268.00 $534,187.00
2007 $35,056.00 $502,470.00 $40,064.00 $574,251.00
2008 $37,685.00 $540,155.00 $43,068.00 $617,320.00
2009 $40,511.00 $580,667.00 $46,299.00 $663,619.00
2010 $43,550.00 $624,210.00 $49,771.00 $713,391.00
2011 $46,816.00 $671,000.00 $53,504.00 $766,895.00
2012 $50,320.00 $721,360.00 $57,517.00 $824,412.00

Mr Sadd's house should have technically doubled in value over Ten Years but the run-down state of the place means it sold at auction for
$670,800 - $50,000 less than the potential average!
A capital gain of more than $420,000  - Plus the "Priceless" enjoyment of the "improvements", swimming pool etc.

The Gladds gained more than $150,000 MORE than Mr Sadd when they both sold similar houses after ten years!
The Gladd's house was well received by the Estate Agent as good stock, and quickly sold for $845,000 to a family buyer.

 

2020 update

 

7.0% Auckland average?
3.5% Bank loans?
It's a no-brainer!

2012 721,360.00 824,412.00
2013 771,855.20 882,120.84 7.00%
2014 825,885.06 943,869.30 7.00%
2015 883,697.02 1,009,940.15 7.00%
2016 945,555.81 1,080,635.96 7.00%
2017 1,011,744.72 1,156,280.48 7.00%
2018 1,082,566.85 1,237,220.11 7.00%
2019 1,158,346.53 1,323,825.52 7.00%
2020 1,239,430.78 1,416,493.30 7.00%

 

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