Property Investment

5 min read21 May 2025

7 signs your house will double in value faster (and the 4 factors that don’t matter)

Kathy Faulkner, Financial Adviser and property investor

Reviewed by: Ed McKnight

Resident Economist, with a GradDipEcon and over five years at Opes Partners, is a trusted contributor to NZ Property Investor, Informed Investor, Stuff, Business Desk, and OneRoof.

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Capital growth isn’t just a nice-to-have … it’s one of the main ways to make money in property investment.

It’s how you grow your wealth and build equity, so you want to buy an investment property that’s actually going to go up in value.

And from our research at Opes Partners we’ve identified the 7 factors of capital growth. These are the 7 signs that your house could double in value faster.

But here’s the thing: I see too many investors get distracted by all the wrong things.

They focus on what looks flash or sounds clever … but not what actually drives up the value of their property.

So, in this article you’ll learn the 7 factors of capital growth … and the 4 factors you can ignore (because they don’t make as much difference).

The 7 factors of capital growth

These are the 7 core factors that influence how fast a property goes up in value.

#1 – Buying in an undervalued location

The biggest thing I’ve found that makes a difference is buying in an undervalued area.

By this I mean a suburb or region where prices are lower than you’d expect, based on the wider market.

For instance, if house prices look a bit cheap in Auckland compared to their long-term average … that’s a good sign. Undervalued areas often catch up, fast. Whereas overvalued areas tend to grow slower in the medium term.

In one scenario we ran, buying in an undervalued area could make an investor an extra million dollars.

#2 – Buying in an areas where house prices go up faster

House prices rise faster in some suburbs than others.

Take Addington in Christchurch. House prices in this suburb have grown much faster than places like Westmorland or Cashmere (also in Christchurch).

Why is this, and will they keep going up in value as fast in the future?

Those are great questions to ask: just because house prices have risen fast in the past … it doesn’t mean they’ll keep going up quickly in the future.

But, when you see house prices jump in an area, you can then ask “Why did that happen?” and “Do I think it’ll happen again?”

You can get this data free by using Area Analyser.

More from Opes:

#3 – Properties with 2+ bedrooms

Properties with just 1-bedroom go up in value slower than properties with 2 or more.

For each year between January 2000 and July 2020, two-bedroom apartments grew on average 1.8% faster in Auckland and 1.3% faster in Wellington.

The trends are noticeably clear: 1-bedroom properties tend to increase in value more slowly than those with more bedrooms.

Although, once you get to two bedrooms or more there is no clear difference in terms of capital growth.

#4 – Buying houses and townhouses

Standalone houses and townhouses tend to increase in value faster than apartments.

In Wellington, if you look at long-term growth trends, apartments doubled every 14.1 years whereas it takes just 9.9 years for a house or townhouse to double in value.

This doesn’t mean apartments are bad, but if you’re looking for long-term capital gains, townhouses and houses tend to do better across most New Zealand cities.

#5 – Buying properties in bigger cities

There isn’t that much data to suggest house prices in larger cities increase at a faster rate than small towns, but house prices do tend to go up more consistently.

Property prices in some smaller regions tend to be flat for a long time … then have quick catch-up periods.

In a median year house prices in Auckland rise by over 7%, but in Manawatu-Whanganui that number is closer to 2%.

Now these smaller regions do have periods of quick catch-up growth that brings up the average.

But my number-crunching suggests you’ve got an 80% chance that Auckland house prices double over 15 years, but only a 60% chance of house prices doubling in Manawatu-Whanganui over the same period.

So if you’re thinking about what’s going to give you a better shot at your house doubling in value, those larger regions can make sense.

#6 – Buying in areas with faster population growth

The next factor is population growth.

When more people move to a city, the population expands. These new people all need to live somewhere and this increases demand for housing.

So you should have a better shot at your house rising in value in an area where the population is going up.

But it’s not a one-one-one relationship because if you have more demand for housing … developers start building more houses.

But for every 1 percentage point in population growth per year, house prices have tended to increase 0.4 percentage points faster per year.

#7 – Properties close to a city centre

Similarly, properties closer to a city centre generally appreciate faster than those on the outskirts.

That’s because central properties are in higher demand, thanks to shorter commutes and better amenities.

The 4 factors that DON’T impact how fast your house goes up in value

Now, let’s talk about the red herrings. These are the 4 things that sound important but don’t lead to higher capital growth.

#1 – School zones

People often say, “Buy in a good school zone and your property will go up in value faster.” But data doesn’t back that up.

Take the Double Grammar Zone in Auckland – some years it performs better, some years worse. On average, it’s about the same as properties outside the zone.

#2 – Size of the backyard

More land doesn’t mean more capital growth. It means a more expensive house.

It might cost more, and it might feel nice to have space for a trampoline, but it doesn’t drive how fast the property doubles in value.

#3 – Whether you buy a townhouse or a house

You might hear people say that houses go up in value faster than townhouses.

This is one you don’t have to pay as much attention to as you might have thought.

In most case, houses and townhouses go up at a similar rate. Houses do have an edge, but it’s marginal. Less than one percent per year on average.

Take a look at houses vs townhouses in Wellington. They’re pretty close.

#4 – All the “pretty” extras

And while we’re at it, a big deck or a nice garden adds value to a home buyer, but not necessarily to your bottom line.

Again, a nice deck makes the house more attractive.

It makes it more expensive. But, it doesn’t mean the house doubles in value at a faster rate.

What property should I buy?

Here’s the key thing – as an investor, you need to think differently.

Home buyers care about feel-good factors. These are things like gardens, school zones and nearby shops.

Investors care about the numbers. These are things like yield, growth potential and tenant demand.

And the big mistake investors make is they spend too much time in a “home-buyer mindset” instead of looking at property from an “investor mindset”.

Kathy 001 2022 08 16 212440 fxys 2024 03 06 230709 kkgk

Kathy Faulkner

Kathy Faulkner, Financial Adviser and property investor

Kathy Faulkner is a Financial Adviser providing 5-star review service to 100s of Kiwi investors. She is a property investor herself and has a diverse property portfolio throughout New Zealand. Her financial advice career started decades ago in South Africa and she knows what it is like to start from the beginning and build wealth through careful investments and hard work.

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The 7 factors of capital growth

These are the 7 core factors that influence how fast a property goes up in value.

#1 – Buying in an undervalued location

The biggest thing I’ve found that makes a difference is buying in an undervalued area.

By this I mean a suburb or region where prices are lower than you’d expect, based on the wider market.

The 4 factors that DON’T impact how fast your house goes up in value

Now, let’s talk about the red herrings. These are the 4 things that sound important but don’t lead to higher capital growth.

#1 – School zones

People often say, “Buy in a good school zone and your property will go up in value faster.” But data doesn’t back that up.

Take the Double Grammar Zone in Auckland – some years it performs better, some years worse. On average, it’s about the same as properties outside the zone.

What property should I buy?

Here’s the key thing – as an investor, you need to think differently.

Home buyers care about feel-good factors. These are things like gardens, school zones and nearby shops.

Investors care about the numbers. These are things like yield, growth potential and tenant demand.

And the big mistake investors make is they spend too much time in a “home-buyer mindset” instead of looking at property from an “investor mindset”.