Easing swell forecast on waterfront property wave
30.10.2008
Easing swell forecast on waterfront property wave
Absolute coastal waterfront property has reached its ‘high-tide’ value limit for the meantime but is showing few signs of retreating as fast as general residential real estate values, according to the latest property research.
Statistical data from leading real estate agency Bayleys reveals that the unique nature of absolute waterfront property has insulated the sector against the downturn in values currently evident across the general residential market.
“While the results of the latest survey show that the strong levels of capital growth experienced (by absolute waterfront property) over recent years has stalled - unsurprising given current economic condition - there is little evidence of a marked depreciation in values over the last 12 months,” says the research report.
“Sales evidence in many locations has been short over recent months as owners choose to ‘ride out’ the current slow down in the market.”
“Market feedback from across the country has a number of consistent themes. Firstly, the appeal of absolute waterfront property remains intact - although both vendors and purchasers are taking a more cautious approach to the market. This is unsurprising given the current state of the economy.
“Secondly, while the absolute waterfront market is generally seeing values holding, in many areas there is a marked oversupply of coastal subdivisions. This has resulted in a significant reduction in values combined with a marked slowdown in market activity.”
Bayleys Research defines coastal subdivisions as sections which do not directly adjoin a beach, which overlook the sea from hills, or separated from the beach by roading access. The company also defines lakeside property as absolute waterfront.
“The differentiation between absolute waterfront property and the wider coastal market is becoming greater as the general residential market cools,” says Bayleys Research.
“While absolute waterfront sections within coastal subdivisions continue to attract purchasers, it is increasingly clear that vendors are having to price their product realistically - as purchasers are unwilling to pay a premium for property set back from the water.”
See Below for nationwide, regional
specific, research analysis…..
Regional
overviews
Southern Lakes (Queenstown, Wanaka)
There
is always strong demand for waterfront property in the
Southern Lakes area -with values reflecting the limited
number of true absolute waterfront properties which
exist.
Levels of interest in sections close to the waterfront have remained steady over the last year - once again supported by the relative shortage of stock available to the market. International buyers continue to form a significant proportion of the Southern Lakes market, with an estimated 15 – 20 per cent of transactions being to overseas purchasers.
Marlborough Sounds
Waterfront
sections in the Marlborough Sounds are amongst the most
affordable in the country. The area is a popular national
holiday spot - reflected by the high proportion of buyers
from other parts of the country… estimated at between 50
and 60 per cent.
Improved waterfront property - land with a dwelling on it - is generally more popular than bare land in the area due to the high costs of construction associated, and having to bring in builders from Blenheim and Nelson.
Taranaki
The Taranaki market is dominated
by ‘local’ purchasers - reflecting the comparatively
isolated nature of the region. Absolute waterfront
properties have continued to appreciate in value over the
last 12 months - reflecting that the region has a limited
supply of developments being brought to market. Unlike many
other areas of New Zealand, Taranaki has a shortage of
coastal subdivision land.
Rotorua and Taupo
Demand for
absolute waterfront property in Rotorua and Taupo has been
steady over the last year - with market activity slowing
from the levels experienced in recent years.
Values of sections in the Rotorua area lakes reflect issues such as ease of access to the city, and water quality. Lake Okareka for example is particularly popular with local buyers - with an estimated 70 per cent of purchasers being ‘local’ due to the fact that it is approximately 10 minutes drive from the city.
Property values at Lake Rotoiti have been on the rise - reflecting the shortage of true waterfront properties, and recently, completion of the diversion wall which has helped improve water quality.
In Taupo, inquiry levels have remained steady over the last year - with good quality absolute waterfront premises continuing to attract competition from prospective purchasers.
The central location of Taupo makes it a popular holiday spot for buyers from all over the North Island - a fact illustrated by the high proportion of waterfront premises sold to purchasers from outside the local region estimated to be up to 85 per cent.
Hawke’s Bay
Hawke’s Bay’s waterfront market
has performed particularly strongly in recent years - with
the market having greater variety, given the recent
development of waterfront apartments in the traditionally
industrial Ahuriri area.
Values have continued to trend upwards over the last year. The market is generally made up of New Zealand buyers - with local purchasers accounting for approximately 60 per cent of transactions.
The region is one of many experiencing an oversupply of coastal subdivision land though - with resultant reductions in value in the face of significantly lower levels of market activity.
Gisborne
Gisborne’s waterfront property
market provides a clear example of the widening gap in
levels of purchaser interest in absolute waterfront property
compared with coastal subdivisions.
The absolute waterfront market has remained steady over the last year while the coastal subdivision market is heavily oversupplied. Absolute waterfront property in the region remains relatively affordable and attracts purchasers fairly evenly from the local area, nationally and internationally.
Tauranga / Mount Maunganui
The
waterfront and coastal property markets which have
experienced significant growth in recent years have
witnessed a reduction in levels of market activity over the
last 12 months, although the value of absolute waterfront
sections has continued to rise in value.
The indicative value of a stand-alone absolute waterfront section has reached approximately $1.5million. The region is a popular holiday destination - with 50 per cent of purchasers being from elsewhere in the country or overseas.
Coromandel
The Coromandel Peninsular market
is quite diverse - given the large number of beaches in the
region. Steady enquiry continues for properties located in
the favoured parts of Cooks Beach, Hahei, Simpson’s Beach
and Whangapoua.
Improved sites are attracting the highest levels of purchaser inquiry as buyers see the value in retaining the property for rental/holiday use and also for redevelopment. Meeting council criteria for development on absolute waterfront sites is easier to achieve if there is a building on site.
The purchaser market is heavily dominated by buyers from outside the Coromandel region - particularly from Auckland and the Waikato.
Northland
Northland’s waterfront property
market has been one of the fastest growing in the country
over the last decade - driven by extremely high levels of
purchaser inquiry from the Auckland market, benefiting as it
does from proximity to the country’s largest population
centre.
It is unsurprising therefore that activity has slowed over the last 12 months as the economy has slowed, and a large number of coastal subdivisions has resulted in a general over supply of such land.
Further north, the property market has slowed more noticeably as the slowing economy and, in particular, rising fuel costs have encouraged purchasers to adopt a ‘wait and see’ attitude.
The high level of the New Zealand dollar on the foreign exchanges has also resulted in fewer enquiries from offshore - traditionally a strong part of the far north property market. The recent reduction in domestic interest rates is likely to bring about a downward correction in the strength of the NZ dollar, which may tempt these buyers back to the market.
Rodney District
While sales activity has
slowed over the last year, well located properties on the
region’s favoured beaches have continued to attract high
levels of purchaser inquiry. At Tindalls Beach and Buckleton
Beach in Takatu, properties on sites of 809 m² sold at
$2.65million and $2.4million respectively. In Orewa a
beachfront property in Noel Avenue on a site of 400 m²
attained a sale price of
$1.8million.
Waiheke
Although there have been
no recent sales on the Waiheke beaches which Bayleys
Research tracks for its value index, there is undoubtedly
still strong interest in absolute waterfront opportunities
on Waiheke when they arise - particularly at the luxury end
of the market.
This point is well illustrated by the sale earlier this year of a property at Wells Bay. The 6.36 hectare site on a private beach sold for in excess of $9 million… a record for the eastern end of the island.
While the market has slowed, the attributes which attract purchasers to Waiheke – such as ease of access from Auckland’s CBD the relaxed atmosphere, burgeoning viticulture industry, and a number of quality restaurants - remain unchanged, and therefore future prospects for the waterfront property market remain positive.
ENDS