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The difference between price and value

The idea that a higher price equals more value is not always the case, as Andrew Nicol explains.

By: Andrew Nichol

30 April 2023

Real estate agents often use the idea that higher price = more value when trying to sell a more expensive property to an investor.

But that’s not always the case … and a notion often proved wrong in the new build market. Sometimes a less expensive property provides more value. And as a financial adviser who looks for new build properties on behalf of investors, I think it’s vital that someone recommending a property can demonstrate its value.

Each month, this section looks at new build properties, analysing real deals to see which is the best investment.


This month’s case study looks at three townhouses in Spreydon, Christchurch.

They’re all being built by well-known developers (redacted so I don’t get angry phone calls). All have three bedrooms, two bathrooms, are within a couple of kilometres of each other, and are for sale in today’s market.

But there are some key differences.


The most crucial factor when looking for new builds is price; it needs to be a good deal compared with other properties on the market.

In this case the most affordable property (Barrington Street) is $34,000 cheaper than the most expensive (Bunyan Street). However, the less expensive properties have larger floor plans.

For any Christchurch locals who read NZ Property Investor magazine, you’ll also know that Spreydon is a more desirable area than Waltham


The most expensive property (Bunyan Street) costs more than the other two properties, but the rent is significantly lower.

That means the gross yield on the Bunyan Street (more expensive property) will also be lower than the other two.

For anyone new to property investment, the gross yield measures how much rent a property collects compared to the purchase price. It’s calculated as the annual rent (52 weeks) divided by the purchase price.

The property with the highest gross yield is Barrington Street, at 4.51 per cent. Next is Simeon Street, with 4.36 per cent. Bunyan St has the lowest gross yield at just 3.85 per cent. So in this instance, price is not necessarily representative of value for an investor.

‘There’s a big difference between price and value. Price is what you pay; value is what you get’


The price of a new build will change dramatically based on whether it has a car park or a garage. From my experience Christchurch townhouses with garages cost $40,000 – $50,000 more than the same property with a car park.

In the case of the three properties discussed in this article, the most affordable property is the only one with a garage. That’s despite it being comparable on many other metrics


If you’re looking to invest in a new build property like this, there are two ways to get one:
1. You can use the information to find a property yourself through a developer.
2. You can work with a property investment company.

These businesses build you a financial plan and then find new build properties that fit that plan.

Opes Partners is one example of a property investment company, although there are others. Property investment companies often don’t charge you a fee. Instead, they get paid by the developer. It’s a bit like mortgage brokers, who usually get paid by the bank. ■

Through Opes Partners, Andrew Nicol works with 97 developers nationwide. He and his team of financial advisers build Kiwi property investors a financial plan and match these investors with new build properties that fit the plan.


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