TelferYoung (Taranaki) Limited
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Taranaki Newsletter - November 2007
22 November 2007
The Taranaki Property Market - A Snapshot
RESIDENTIAL
In recent months a change has occurred in the Taranaki residential real estate market. Previously the vendor had the advantage but now the buyer holds increasing power. This has been partially due to poor winter weather, but also to increasing residential mortgage interest rates and general economic uncertainty. Buyers now have increased choice and are being more cautious than in recent times. Statistics indicate a reduction in sales volumes and while prices are generally holding, some properties are easing slightly in value. Historically spring injects some impetus into the housing market and properties which are well presented and located continue to be sought after, but the greater numbers available for sale means that those that have some adverse feature are more difficult to sell and may be discounted.COMMERCIAL
The commercial market remains active but with limited listings of quality properties, resulting in returns now generally below bank deposit rates. An example is the recent sale of the KFC premises in New Plymouth at a 7.3% yield. A shortage of properties for sale makes it difficult to judge the extent of buyer interest, however enquiry received from outside the province suggests that there is similar shortage in other locations. Increased dairy payouts may be channelled into commercial investment, putting further pressure on available listings Although the market remains strong purchasers are starting to become discerning which could lead to greater variation in yield rates, with comparatively low yields in general suggesting that many purchasers have expectation of ongoing capital gain. If this is to happen a further drop in yield or increase in rent will be required. Increasing construction costs require higher rentals to justify the initial development and this is also having a flow-on affect as the market adjusts to maintain relativity. While vacancies in general remain low the reduced number of new developments, and longer vacancy periods for older premises in particular could indicate that the demand for rental space is starting to ease. If this is the case then investors will need to look more closely at the quality of their property investment.RURAL
This market is dominated at present by the upsurge in dairying returns which is pumping money and confidence back into farming with the exception of traditional sheep/beef and hill country where returns remain inadequate. There is renewed interest in the purchase of adjoining land by existing farmers to strengthen dairy units and early indications in the new selling season also show higher interest in dairy support blocks to backup intensively farmed milking platforms. A mid November auction in North Taranaki demonstrated keen interest in stronger dairy farms. However few larger properties come to the market in Taranaki and local dairying investors are tending to look to the South Island for expansion with some showing an interest in South America.Tempering the current dairying optimism to some extent is uncertainty over the Fonterra restructuring and possible fallout from the sub-prime mortgage meltdown in the USA which may tighten credit lines and raise the cost of borrowing.COMMENT
The property market is always cyclical and is affected by many different factors. Although there are highs and lows these can be reasonably well predicted. Prudent and well informed buying is the key to good investment. TelferYoung provides research and advice to accurately determine the level of the market for any individual property and across the whole market spectrum.
WE WELCOME
Dave Luxton
Dave has returned from overseas to take up a valuer position at TelferYoung. After completing studies at Massey in 2004 with a BBS majoring in valuation and property management he worked in Wellington for 18 months. He gained experience in the capital city valuing a range of commercial property, including government, institutional and private assets.Dave relishes being back in Taranaki and is working with registered valuers at TelferYoung undertaking predominantly residential valuations and a range of commercial assignments.
Kate Stewart
Kate has just joined TelferYoung after studying for a B Applied Science in rural valuation and management at Massey and is looking forward to a career in land and property advice while adding some gender balance to our valuation team. Originally from Eastern Taranaki, Kate boarded at NPGHS before going on to University.She will acquire experience in the residential and small holdings property categories initially, then expand on her rural qualifications by assisting John Larmer with our wide rural client base.
Back issues of the newsletter can be obtained from TelferYoung (Taranaki) Ltd
143 Powderham Street,
P O Box 713,
New Plymouth,
New Zealand.
email: telferyoung@taranaki.telferyoung.com
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+ John Larmer + Mike Myers + Ian Baker + Mike Drew + Adam Boon + Dave Luxton
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.
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