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Lifestyle blocks replace farms in urban sprawl

Media Release
Date 7.10.2008

Lifestyle blocks replace farms as urban sprawl gathers pace

Increasing numbers of lifestyle properties are cropping up around New Zealand’s towns and cities as farm land converts to residential use, according to new property research.

The development of country lifestyle patches close to metropolitan cities and provincial centres has drawn an increasing number of families out of the city to ‘greener’ locations within 45 minutes drive time of the central business districts, says the research findings from leading real estate company Bayleys.

Bayleys Research senior analyst Ian Little said that traditionally, buyers of lifestyle blocks – rural land holdings of between 0.4 – 30 hectares – had been interested in the land’s income-producing potential, such as from grazing or orchard production. Close to half of lifestyle blocks nationally deliver annual returns of $40,000.

“While these groups are still represented, people today are buying lifestyle blocks which are much smaller than the traditional ‘10–acre block’, and have no intention of using the land for agricultural purposes. They are in it strictly for the country ambience,” Mr Little said.

“The five most popular reasons people buy these properties today are country lifestyle, peaceful environment, space and privacy, clean air, and a healthy place to raise children. While wishing to enjoy the benefits of a rural lifestyle, many purchasers still require access to metropolitan areas for employment and business purposes.

“Easy access to motorways and urban areas is one of the key determinants of lifestyle property values. Properties close to cities or major towns tend to appreciate at a faster rate than those further out.”

Figures from the Ministry of Agriculture and Forestry estimate that the number of lifestyle blocks around New Zealand was increasing by 7000 per annum, although this number was expected to have fallen off in the current subdued property market.

“In areas where lifestyle subdivisions have been limited – perhaps due to stringent council subdivision rules - value growth has been marked,” Mr Little said.

“Furthermore, as lifestyle areas located on the fringe of urban centres continue to come under pressure from expanding residential and commercial requirements, values of these lifestyle properties have increased significantly.

“The influx of ‘lifestylers’ from big cities has in turn brought increased vibrancy to many rural areas, and the increased population has meant that country shops and cafes have become more economically viable, while rural school rolls have also increased.”

Mr Little said the lifestyle block trend has encircled virtually all of New Zealand’s bigger cities and population bases – including Whangarei, Auckland, Hamilton, Tauranga, Rotorua, Napier, Hastings, Gisborne, Wanganui, New Plymouth, Palmerston North, Wellington, Nelson, Blenheim, Queenstown, Christchurch and Dunedin, as well as numerous smaller towns.

The Ministry for the Environment provides policy and implementation support of the Resource Management Act - aimed at balancing the needs of urban and rural areas in an economically and environmentally sustainable way.

Resource Management Act implementation manager Craig Mallett, said lifestyle blocks were very popular around urban areas, and in general, councils had done a good job of creating an appropriate balance of agricultural and residential uses of the land.

“They (lifestyle blocks) are moving now to urban residential limits so that the smallest lifestyle blocks stay within certain boundaries,” he said.

"This has been a planning issue for more than 20 years now, and it can generate concern about urban sprawl and loss of productive farmland. However, some lifestyle blocks are quite productive economically, and contribute to the economy."

Bayleys country manager Richard Graham said that for some farmers, land subdivision had been a quick way of accessing capital to re-invest into their commercial operations.

“For farmers, particularly those near the urban fringes or coastal areas, land values and rates have increased out of proportion to the land’s productive capacity. By subdividing, they are in some cases freeing capital to invest in making their farms more productive in other ways,” he said.

Quotable Value reports that in the 10 years to December 2007, the value of improved lifestyle sections across the county has outperformed the residential market - rising by 144 per cent across the country while residential house values rose 130 per cent.

This year, as with the mainstream residential property market, activity around the sales of ‘pony properties’ has slowed, while values have slipped. The average value of lifestyle property nationally in the June 2008 quarter was $552,019 according to the Real Estate Institute - down on the record level of $621,606 set in the June 2007 quarter. Sales volumes are also down.

“It seems likely that the current restrained level of market activity and downward trend in prices will continue in the short term as the sector faces the same economic environment as the housing market as a whole,” says the Bayleys research report.

“The mid to long-term outlook, however, is positive. Interest rates are falling, unemployment is low and the economy, which has slowed significantly over the last 12 months, is forecast by most commentators to pick up again in late 2009 or early 2010.”


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