TelferYoung (Northland) Limited
Northland Newsletter - May 2005
1 May 2005
Issue 9
Currently the proposed new stadium at Okara Park is being discussed in the media with wide variations in opinions. TelferYoung (Northland) Limited considers that construction of the stadium is essential if Whangarei and Northland is to maintain its present growth. The facility must be designed to cater for a wide range of uses, both indoor and out. We consider too much emphasis has been made that the stadium is solely for rugby purposes, we understand this is not correct and that they would be a user along with other bodies, albeit though a major user.
Northland and in particular Whangarei has progressed very significantly over the past ten years. We are the only city in New Zealand that has one million people two hours drive to the south. There will always be a population drift northwards and our firm can only see our region expanding and developing at a significant rate. One can recall the too-ing and fro-ing when Wellington were contemplating building their now completed stadium. It was by many regarded as a white elephant and unnecessary, its existence has galvanised the city and it is now a tremendous asset to Wellington. We believe that if Whangarei plans a quality stadium with other facilities that it too will become a very valuable asset for the region. The only reservation we have is that the facility is not built of a sufficient size or quality to cater for the medium-long term needs of the region and to attract a wide range of potential clients. Some of the more vociferous opposition to the stadium are our pensioners within the city and an increase in rates of possibly $1 per week may be difficult for them to cope with but we still must look at the overall benefit to the population at large and a continued feeling of pride in Northland.
Whangarei Residential
The Whangarei City residential property market has continued an upward trend in early 2005 following a strong period of sales growth and price appreciation that occurred throughout 2004. One of the biggest movers has been Tikipunga, a suburb of average to slightly better than average houses, where price rises have been dramatic in the last 18 months. 12 months ago there would have been an excellent choice of property up to $160,000. Today's prices at $200,000 plus are prevalent.
It is apparent that residential property investors in Whangarei are competing with the first home buyers in the lower to middle end of the market. We envisage that further interest rate rises will have an impact on both parties.
Recent residential evidence suggests this market may be close to a peak. If tenants vacate rental investment properties, owners may have to consider lowering rentals slightly to attract new tenants especially in some of the "lower cost" housing areas.
Small towns on the outskirts of the city have certainly benefited from the overall mini-boom as they offer cheaper alternatives to the city suburbs.
Coastal Market South of Whangarei
As is the case in many coastal locations throughout New Zealand, the investment in prime waterfront land has reaped excellent returns. A recent sale at Lang Beach at $1,645,000 indicates a compounding return of 22.2% over a ten year period from its original sale price early in 1995. The site also sold early in 2003 for $750,000, indicating a return of 119% over the past two years. Obviously this spectacular growth in recent years is driving many purchasers to buy coastal land.
In order to satisfy the demand, there has been a proliferation of subdivisions in the One Tree Point (harbour side) and Ruakaka to Langs (ocean beaches). There are currently at least six major subdivisions, plus the Hopper Developments Marsden Cove Waterways Subdivision, currently on the market. At least another four subdivisions that we are aware of are planned in the next 12 to 18 months. Sections in these subdivisions generally range from around $125,000 up to $260,000 with the exception of the Waterways.
On 30 April, the initial offering of 101 sites in the Marsden Cove Marine Village was released in a buyers choice auction. 51 lots sold on the day realising just under $27,000,000. We understand several lots sold immediately after auction bringing in a total of around $30,000,000.
The majority of this demand comes from Auckland although a significant amount of growth is also anticipated from the employment opportunities which will be generated when the third and fourth berths are established at the Marsden Point Deep Water Port. All in all a very positive future for the area.
Coastal Market North-East of Whangarei
The coastal residential market in the Tutukaka/Matapouri areas are still relatively buoyant with high prices being paid for beach front properties or those enjoying unrestricted sea views. A handful of properties in waterfront locations have sold early in 2005 in the $1,000,000 plus price bracket. A 9.3020 hectare coastal block between Tutukaka and Matapouri recently sold in early 2005 for $4,400,000. The property included access to two separate beaches (shared) the improvements comprised an architecturally designed innovative four bedroom residence.
Rural Market
Values for all types of rural properties have steadily escalated over the past year. Any property with a "twist" - either having views - coastal or good rural, or relatively close to a town, have increased in value at a faster rate. There are a number of investors in the marketplace looking for development propositions, particularly south of Whangarei and within the coastal fringe.
Values for avocado orchards have remained relatively static, the past couple of seasons have been poor producing ones and it is hoped a better season this year will bring a little more confidence back into this market. Two recent sales of six hectare plus vacant volcanic blocks have realised $500,000, at this stage it is unclear whether they will be utilised for horticulture purposes. The small block influence, particularly on the volcanic land is the dominant driver for the horticulture land values.
As regards values of small holdings, it was apparent midway through last year that there was a dramatic increase in value for small blocks, particularly those on volcanic soils. Regardless of the size, values increased by $30,000 - $40,000 per lot and we believe a further and similar sized escalation has just occurred. Good quality volcanic blocks which were one year ago selling for around $140,000 are now $200,000 plus.
As regards coastal land on the West Coast, there have been recent sales which verify that developable land on the East Coast is scarce and values of West Coast land is being elevated by high East Coast values. We are aware of a large West Coast property near Whangape which sold earlier this year for $4,200,000, the bulk of the property has been resold for a very substantially increased sum.
Provided commodity prices remain in their present band and the dollar does not further rise, we do not envisage any dramatic changes to the rural market in Northland.
Back issues of the newsletter can be obtained from TelferYoung (Northland) Ltd
17 Hatea Drive,
PO Box 1093,
Whangarei,
New Zealand.
Telephone : 09 438 9599,
Facsimile : 09 438 6662
www.telferyoung.com
email: telferyoung@northland.telferyoung.com
+ Alistair Nicholls + Steve Baker + Mike Nyssen + Grant Algie + Julian Rattray + Nigel Kenny + Mark Aslin + Craig Russell + John Hudson + Aaron Hunt + Martyn Cottle
Opinions expressed in this newsletter are of a general nature and should be used as a guide only. TelferYoung should be consulted before acting on this information.