TelferYoung (Northland) Limited
Northland Newsletter - May 2007
12 June 2007
Summary of Whangarei Residential Property Market 2006
Following the house price escalation period of January to August 2005, the residential property market within Whangarei City showed 12 months of more stable house prices with the median sale price over this period averaging $264,000. The spring and summer of 2006/2007 has seen the median sale price increase to $290,000 in January 2007. A mixture of demand from 'baby boomer' property investors and first home buyers combined with rising construction costs is a major cause for the increased prices over the last two years.
A number of sales to note below which have sold twice within the last 12 months show that property prices within Whangarei are still increasing and there is good demand for properties under $350,000. The first sale comprises a 1950's three bedroom weatherboard dwelling in Onerahi which sold in April 2006 for $225,000. The dwelling subsequently had a small extension completed over the front concrete terrace and the exterior repainted. It resold in January 2007 for $275,000.
Another sale to note was on Kamo Road which comprises a 1940's three bedroom dwelling with a single garage that sold in March 2006 for $225,000. The dwelling was repainted and resold in February 2007 for $256,000.
A modern three bedroom plus study brick and tile dwelling with double integrated garaging sold in February 2006 for $463,000. The dwelling was untouched and then resold in September 2006 for $505,000.
A land sale to note in Kamo East occurred in March 2006, sale price $104,000. The land remained vacant and unimproved, reselling in October 2006 for $129,000.
The above sales show a range of 9% to 24% increase over the last 12 months.
REINZ statistics show that for 2006 Whangarei City experienced a slower year with the average number of sales per month being 111, these taking 40 days to sell, as compared to 2005 which averaged 125 sales per month and only 28 days to sell.
Throughout 2005 the time to sell was fairly steady and did not vary from the average while in 2006, during the winter months, the days to sell extended to 50 in June.
Another interesting fact is the increased number of real estate agents listed with REINZ throughout the Northland Region. In January 2004 there were 591 listed real estate agents compared with 834 agents in January 2007. This equates to a 41% increase in real estate agents over the last three years.
A recent survey of a number of local building companies in Whangarei shows a 25% rise in the cost to build a new home over the last two year period. The latest rates for an average specification, three/four bedroom brick and tile dwelling with double integrated garaging and a total floor area of 200 m2/220 m2, is $1,250/m2 to $1,300/m2. The building companies with slightly higher specifications range from $1,400/m2 to $1450/m2. This is a considerable increase compared with two/three years ago when they were at $1,000/m2 to $1,050/m2.
Although the media predicted the property market to slow down over the last two years, Whangarei has still experienced an increase in property values throughout 2006. Whangarei has been a seller's market for the last three years, however we are now seeing a more balanced situation. Will property prices in 2007 level off and the next 12 months experience a static market?
Confused?
Since the article in the June 2006 newsletter headed 'Marsden Point - the hype and the reality' we would have to say that a fair degree of confusion currently reigns in the marketplace. Where do speculator purchasers' expectations begin and end? Where do serious end user purchaser/developers or purchaser/occupiers place the affordability stake in the ground?
Sales pre 2006 but with 2006 settlements for larger blocks are recorded as follows:
Deferred industrial location - 94.8 ha - $210,000/ha - $21/m2
Deferred industrial location - 37.0 ha - $162,000/ha - $16/m2
Sales of smaller blocks, (3 - 6 hectares) mainly in the 'heavy' industrial zone, over the period March to October 2006, are noted as follows in date order:
Net Effective Area Price
$438,000/ha - $44/m2
$729,000/ha - $73/m2
$353,000/ha - $35/m2
$330,000/ha - $33/m2
$430,000/ha - $43/m2
Currently light industrial land in the Kepa Road location is regarded as being in the $100 - $125/m2 value range.
We note however that during 2006 the land involved in the first two sales was being marketed (subject to title) at $140 - $200/m2 depending on size and location. Deposits were relatively low at 5.0% and title expectations are sometime around 2008.
If one were to take a typical site of 2000 m2 at $200/m2 and a 1000 m2 industrial use building (i.e. engineering/trades use etc.) we would have a total development cost including site development and yard and fencing at $1,100,000 plus GST. Essentially, the building would be a plain industrial structure, mainly workshop with very limited office and facility space. At a minimum 8.0% return, the rental would be $88,000 per annum plus GST or effectively $88/m2 of building area. This is considered a full current market rental as at the date of writing.
The question has to be asked, if up to 200 sites are available in two year's time, is there a market for development/use/rentals? Is there likelihood of capital gain for speculative purchasers? How big an influence are they having in the overall market?
Survey Results
We had a good response to our survey carried out during December 2006. We were looking for feedback from clients to help us improve our level of service and continue to strive to be the best provider in the property field within this region.
Respondents indicated that they were overall very happy with the service TelferYoung (Northland) Limited provided.
All responded that their onsite inspection was carried out in a friendly manner, clear instructions were taken and their report was done in accordance with those instructions. 88% received their valuations within the set time frame and all stated that they would recommend TelferYoung (Northland) to others.
62% responded that they rated the handling of the enquiry and the overall service received as excellent and 38% rated it as good.
The respondents rated our reports highly with comments such as 'great report, explained well'; 'well structured, detailed and presented'; 'excellent-well presented and exactly what we could have asked for'.
We would like to thank those who took the time out to complete this survey. Congratulations to Helen and Peter Hadfield of Abel Tasman Lodge, Paihia winner of our one dozen fabulous Northland wines, for filling out and returning the survey.
New Staff
Aaron Hunt
Aaron joined the TelferYoung (Northland) team in August 2006 to assist Alistair in the rural sector. He was brought up on a beef farm in the Manawatu before graduating with a B.Com.Ag (VFM) Honours degree at Lincoln University. Prior to taking up this position he worked for six months in the Waikato as a Valuer before undertaking a year long OE. Interests include farming, outdoor activities and basically any sport being played. He has brought the average age of the office down and is looking forward to helping out clients with their rural requirements.
Martyn Cottle
At 42, I must be one of the oldest rural valuation students. Who cares. I was looking for what I could do for the next 25 years of working life that was challenging, intellectually stimulating and got me out of the office. Since working at TelferYoung (Northland), I know I've made the right call.
The work brings together my varied employment background of survey draughting (6 yrs), commercial building (4 yrs), secondary teaching (4 yrs), and lastly, for 10 years as a managing director of a joinery and glazing firm employing upwards of 20 staff.
The past two years have been spent in full time study as an extramural student working through a Massey University, BApplSc. which I plan to complete part time over the next two years as I work towards registration.
The range of work that I have been involved with at Telfer Young has been extremely interesting. I'm primarily assessing lifestyle and residential properties. There have been some amazing homes built in the district, all experiencing fantastic appreciation in more ways than one.
I have a very supportive wife and three great kids. Interests include coaching junior hockey, motor racing, and music.
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.