TelferYoung (Northland) Limited

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Northland Newsletter - December 07

5 December 2007

Whangarei City Residential Section Market - Whangarei is the service centre for Northland and is located some two hours by road north of Auckland.

Whangarei District has a population of some 73,000 people and the urban area of Whangarei City has a population of approximately 45,000 people (refer to statistics appended to this report).

Whangarei is well serviced with shopping and schools and is the base of central and local government, rural, forestry and petrochemical industry, major retail, industrial and manufacturing industries.  The recent development of the deep water port at Marsden Point has been key to anticipated dramatic growth in the Marsden Point/Ruakaka locality.  The overall northward and overseas population drift into the area over very recent years has had a very positive effect on the local economy.  While it is recognised that growth activity has probably peaked over the last 6 to 12 months, indicators prepared by various financial institutions and economists anticipate Northland will fare well in future years and should not suffer to any great extent from any easing of the recent strong growth cycle. 

Past Section Demand Statistics

The above statistics do not include sales where spec builders have sold house and land packages within their own subdivisions or by way of infill housing packages on already developed sites. 

Census Date Comparisons

Comparing the two sets of statistics we note for the Urban Area of the City (as distinct from District wide).  

Future Section Demand

It is generally agreed that the property cycle has probably peaked and that while there are no expectations of a major decline in activity and prices, we are entering a period of somewhat slower but stable activity. 

To project this into future section demand must be a matter of opinion, however we anticipate at a medium level of projection an average annual demand of around 150 vacant residential sites in the City Urban Area (as distinct from the District wide demand).  It is our experience in the market that the highest interest for urban residential sites is for level to easier contoured lots of up to 1000 m². 

Future Section Supply

1. As at June 2007, within the City Urban Boundary, approximately 25 scheme plans have been prepared for some 1,500 sites (including the subject property).
2. As at June 2007, within the city Urban Boundary resource consents had been granted or were well on the way to being finalised for around 725 sites (the subject property is not included here). 

If the average anticipated demand over the next 10 years is 150 sites per annum, currently anticipated developments should be able to provide the future supply without taking into consideration other land not yet at the planning stage. 

Current Section Prices

We have completed considerable research in respect of section sales throughout the urban area of the city, and have had discussions with various real estate agencies as regards current asking prices. 

The following is a selection of both current section prices achieved and current asking prices expressed as a price range. 

Has The Bubble Finally Burst In Bream Bay

Despite the fact that it's a wonderful place to live, for the time being it certainly seems that the strong growth in property values experienced from 2003 until late 2005 has finally come to an end.  Early in 2006 the signs were there, since then buyers have slowly exited the market.  Those buyers that remain are generally very cautious and they are certainly not making any hasty decisions.  There are of course a few exceptions.  We recently heard of a traditional kiwi bach which sold within five hours of going on the market, and at a reasonably good price. 

Within one of the larger subdivisions in Bream Bay there have been a number of spec homes built over the last 12 months or so.  We understand there are now 22 properties on the market within that subdivision.  This equates to approximately 20% of the total housing stock within the subdivision which by historic levels is very high.  While some of the developers have reduced asking prices over the last few months, mainly on the inferior homes, they have still not sold, indicating a general absence of buyers rather than a totally price orientated market. 

In this market quality counts, evidenced by a very recent sale of a well finished, high quality property that was realistically priced.  The correct mix of quality, cost and profit margin, balanced with asking price, is now very crucial for spec builders to get right if they want to achieve a profitable sale within a reasonable time frame. 

Where to from here?  That only time will answer.  However we suspect that things are not going to improve in the short term.  There is no doubt that the demographics of Bream Bay and particularly around the Marsden Point Deep Water Port, are excellent for medium to long term growth.  In the period 5-10 years out the area will no doubt grow considerably.  However, for this growth to accelerate a rail link between the Port and Auckland is essential, the fourth berth developed and several large scale and smaller industries will have to be established in the area.  With employment opportunities, population growth will occur, once this trend starts it will no doubt gather momentum.

For those purchasers patient enough to take a medium to long term view, purchasing property in the Bream Bay area still remains a good bet.  However, in the short term we believe values are likely to remain stable at best. 

Mike Returns

T.Y. Northland are pleased to have Mike Nyssen return to his Director's role after a 12 month leave of absence.  During that time Mike, Anna, Joshua and Kate saw parts of New Zealand never seen before and spent time in Dunedin.  They now appreciate our subtropical climate.  Mike returns to his specialist role and will expand our coastal coverage and share his residential skill with our support valuers.

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