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MARKET WATCH - Summer 2012
Welcome to the Summer Edition of the Market Watch for the Harcourts Highland Real Estate Group. I trust you find it informative and pass it on to your friends and colleagues.
To download the Market Watch print version click here
Happy New Year to you from the Highland Real Estate team. We have certainly had a very nice taste of summer across Otago with beautiful hot days and nice evenings to enjoy with friends and families.
We have already seen very good enquiry levels in our offices this year with buyers getting into the market across all sectors and a large number of owners looking at marketing their properties. The ongoing challenge for sellers in the current market is still the temptation to overprice property and therefore risk the potential of a sale.
Over the holiday break our offices have had strong interest in first homes, holiday homes, apartments and land parcels. A two tier market is evolving with any property with an X factor attracting strong interest from national and international buyers and we continue to have multi offers on these special properties.
2012 is shaping up to be another interesting year in the property sector with the keyword for the year being “confidence”. That is the confidence to act and I think people are just starting to think it’s time to move on and make some decisions.
People’s confidence has been knocked during the last three years. As a nation we have not felt very good about the economic situation and every time we start getting a bit of a lift we get a kick from Europe or somewhere else in the world.
Buying a house is a big decision and in times of uncertainty many hold back. Hopefully the global situation sorts itself out and everything settles down. I believe our markets should snap out of a five year trough later this year and confidence will return. So we are getting to a phase where people are sick of not acting and they are going to start buying again. I think towards the middle of the year they’ll have more confidence to buy and we will see a significant rise in sales volumes.
Having spent 25 years in the Otago property scene I always focus on the property cycle and the associated market drivers. History does repeat itself time and time again. The graph from REINZ outlines the Housing Price Index from 1992 showing the Annual Percentage Change versus Rolling 3 Month Percentage Change. It clearly shows the last 2 cycles and the graph demonstrates that the market is coming out of a five year consolidation phase. Predictions are that towards the later part of the year there will be positive growth. The only potential negative impact on the horizon is what could happen in Europe with the Euro. (In recent times the only way the French could impact us was on the rugby field however it is a global financial world that we live in).
“Currently these are early days in the upward leg of the housing cycle. The second half of this year will be interesting, interest rates will still be relatively low, housing demand will continue to be greater and our labour market will be firmer and our investor market will be more active and a lot of attention will focus on our ability to increase housing numbers. A risk is that our builders will be in Christchurch or Australia and will not be able to meet housing demand” says Tony Alexander BNZ.
With the potential for capital gain especially for investors there may be a house price lift here.
I have seen it before and all I can say is that it is going to be an interesting and exciting 12 months. It all comes down to confidence.
Our interest rates continue to be at a low level making financing a property transaction attractive in the current market. We continue to see the first home buyer market taking advantage of these low interest rates to access the market.
The Canterbury Earthquake and recent aftershocks continue to raise the level of property enquiry and in turn sales that we have had across the region. The Christchurch rebuild will have an impact on building costs in Otago and there will most certainly be an increase in building costs. You may not get a tradesman here to build, so therefore we’ll have a shortage of stock and this may also push existing property prices up.
Please have a read of this Market Watch and reflect on the market’s performance and your property goals for 2012. Always remember when it comes to Real Estate in the Otago region that no one can deliver more than Harcourts Highland Real Estate Group.
We look forward to helping with all your property requirements.
Kelvin Collins
GM Highland Real Estate Group
NEW ZEALAND PROPERTY MARKET
The Quotable Value price indices for December show that New Zealand residential property values continued to gradually increase, rising 2.4% over the past twelve months. Nationwide values are now 3.5% below the previous market peak of late 2007. In our Otago region Dunedin was 1.6% below the peak with an average sale price of $265,210 and Queenstown was 1.5% below the peak with an average sale price of $521,089.
However, despite national values moving upwards during the year, the property market continues to be characterized by lower than normal sales volumes.
QV said the lower sales volume came with buyers acting cautiously throughout 2011, taking their time to research before making offers.
First home buyers came back into the market in 2011 encouraged by low interest rates. This increase in activity at the cheaper end of the market was reflected in an average sales price of $398,411 for properties sold in the last 3 months of the year.
The 2012 property outlook is hard to pick and is heavily influenced by consumer confidence, so it will be fascinating to see how 2012 pans out.
The property markets in the provincial and rural areas are heavily dependent on the strength of the local economies in those areas. A strong rural sector typically has a positive impact on the property values in towns supporting those areas, likewise the coming or going of large local industries can have a significant impact.
Overall it is certainly an interesting time for the New Zealand property market and we believe there are signs of a more positive future and we are feeling Confident.
So, what has been happening in Otago?
DUNEDIN MARKET
Dunedin values varied throughout the year but increased steadily from August onwards to finish the year 1.6% up and 5.2% below peak.
The year finished with a slight improvement total residential sales compared to 2010. There was also a higher medium sales price although this has been relatively stable over the last 4 years. Generally quality homes have seen an increase in value but weak demand for poorly located or constructed property. Listings are considered tight and tidy well priced property is selling quickly especially in the first home buyer market and top end. There has been good enquiry from people moving to the city but the majority of sales are still to local residents.
Investment property continues to be soft and buyers expectations of yields on high maintance property are now closer to 10%.
BALCLUTHA MARKET
Overall the property market in South Otago remains similar to what we saw last year with an uplift in sales from spring. Vendors are more acceptable to the consolidation in the market and lowering of their property values and are now willing to list and accept offers lower than they have in the past 2 – 3 years. Strongest demand has been from first home buyers which has seen a reduction of rental property available. There is now a shortage of rental property and rents have risen slightly over the year. Sales are achieving 8-9% yeilds.
The rural market in South Otago is consolidating with a reasonable number of properties being sold to neighbours’. Funding is still an issue for young farmers and demand for larger property is predominately from corporate interest.
CROMWELL MARKET
Visitor numbers to Cromwell over the Christmas holiday period have been very encouraging. Interest in property from the Canterbury region has been genuine and resulted in a number of contracts being written.
This strong activity follows an exceptional level of sales for December.
We are very confident interest in our region will remain strong and properties priced to the current market conditions are attracting good interest.
QUEENSTOWN & ARROWTOWN MARKET
Total sales numbers in Queenstown were 41 for December so sales volumes are gradually increasing. Our team has seen increased activity in the first home market with a number of multi offers on properties. The number of offshore buyers, especially from Australia, is picking up as well. We have also noted a significant increase in the number of sales over $1,000,000 with 66 sales in 2011 compared to 45 in 2010.
Our office had strong interest in development and trophy land over the holiday break from national and international buyers. The December report from Queenstown International Airport indicated that the number of international passengers was up 8.4% compared with December 2010 and domestic passenger numbers were up 10.1%, so keep these arrivals coming.
There are certainly signs of confidence creeping into the Queenstown market.
December was a very strong trading period for our Arrowtown team and so successful that current stock levels are at an all-time low. Buyer enquiry has been very strong throughout the holiday period and our consultants have been working frantically to identify potential listing opportunities. Properties priced well are attracting multiple offers and the team has handled a number of these transactions over the period. If clients are considering selling, it does seem a good time to come to the market. Competition from similar properties will be low and buyer interest is high.
Overall, there are some great opportunities in the market currently, so if you are thinking of buying or selling contact your local Harcourts agent and get a true professional working for you.
For property information please go to www.harcourts.co.nz
Snapping Out of it
Source: Mountian Scene, Thursday 12th January 2012, Philip Chandler
Queenstown’s real estate market should snap out of a five-year trough late this year, agents’ spokesperson Kelvin Collins says.
Collins – spokesman for the local branch of the Real Estate Institute of New Zealand – predicts confidence will return to the market, but not before another tough six months.
Queenstown was coming out of a five-year consolidation phase, the longest it’s ever experienced, Collins says – “but that followed the longest period of growth we’ve ever had, 2001 to 2007”.
“I think people are just starting to think, it’s time to move on and make some decisions.
“I think towards the end of the year they’ll have more confidence to buy and we’ll see a rise in sales volume.”
People’s confidence has been knocked during the past three years, Collins says.
“As a country we haven’t felt very good about the economic situation and every time we start getting a bit of a lift we get a kick in the arse from Europe or from somewhere else.
“Buying a house is a big decision – in times of uncertainty, you hold back.
“Hopefully, Europe sorts itself out, nobody pushes a button in Korea to let a bomb off and everything’s going to settle down.
“We’re getting to a phase where I think people are getting tired of living with the in-laws or tired of flatting with 10 people, and they’re going to start buying again.”
House-buying demand would also come from the Wakatipu’s annual four per cent population growth, Collins believes.
“That’s about 700 or 800 people a year coming to the region. On that basis, we need 250 to 300 houses every year to cater for that demand.”
With 10,000 properties in the Wakatipu, there should be 1000 transactions a year, Collins believes.
Instead, only about 580 houses and sections sold last year, he says.
Already, first-home buyers were becoming more active.
Collins: “If you look at the median house price, that’s been relatively low, and that’s an indication that the bottom end of the market has been more active than the middle to upper end.”
Queenstown’s Resort Property Rentals, in its pre-Christmas newsletter, noted that rental properties are increasingly being snapped up by first-home buyers looking to live in them.
“If this trend continues it could mean less rental stock is available, pushing prices up,” the newsletter says.
Collins says at the top end of the market, ‘X’ factor properties have been attracting multiple offers and there’s been a lift in values.
Otherwise, Collins doesn’t believe prices will rise till there’s first been a lift in activity.
Come next year and 2014, he suggests there’ll also be an increase in local building costs due to price pressure from the rebuilding of quake-hit Christchurch.
“You may not get a tradesman here to build, so therefore we’ll have a shortage of stock and that will push existing property up.”
Collins notes the lift in section buying at Jack’s Point.
But he also believes the market would welcome the proposed 730-section Shotover Country subdivision, near Lake Hayes Estate.
Auckland replaces region as least affordable
Source: Otago Daily Times, Friday 13th January 2012 James Beech
The fact Auckland has replaced the Central Otago and Queenstown Lakes districts as the least affordable region to buy a house is "a positive", a Central Otago Lakes real estate spokesman said.
Massey University's latest home affordability report, released yesterday, found that in the last quarter, buying a home became more difficult for buyers in Auckland. However, in Central Otago Lakes, which previously held the top spot, affordability improved.
The university's home affordability index is calculated taking into account interest rates, wages and house prices. Nationally, affordability dipped 1.9% in the last quarter as the national median house price went up by 3%.
Real Estate Institute of New Zealand (REINZ) Queenstown spokesman Kelvin Collins said yesterday one of the differences between Auckland and Queenstown markets was the resort did not have many old areas and so had fewer entry-level properties.
Auckland was also experiencing a resurgence of buyer confidence, yet to be felt in Wakatipu.
"Every town's got the south side of the railway line-type property, but Queenstown doesn't have that because all our old houses are on good sections, so they have a high land value component.
"A first home buyer coming to this market is generally buying a brand new three-bedroomed, two-bathroom house with a double garage in Lake Hayes Estate. If you compare property with property, we're actually no more expensive than some other areas of New Zealand.
"If you look purely at median house prices, you can say yes, Queenstown's expensive, but if you start comparing apples with apples, we are actually more affordable than a lot of other areas."
Mr Collins said there had been good demand for property in the resort's Fernhill and Sunshine Bay suburbs over the past few months. Interest rates had helped first-time buyers get into the market.
Report compiler Prof Bob Hargreaves said given the financial turmoil in Europe it was "surprising that house prices are increasing in several regions, Auckland in particular".
"However, very low mortgage interest rates, combined with more relaxed lending criteria, are combining to bring more buyers into the market and new construction is still at a very low ebb."
Mr Collins said house prices could not diminish below cost in growth areas and Queenstown was a growth area. The median house price was $510,000 but a "good, solid 20-year-old property" could be bought for $350,000 to $400,000 in Wakatipu, he said.
In the past quarter, the report said, four of the dozen regions showed improvements in affordability: Otago/Lakes 9.9%, Waikato-Bay of Plenty 4%, Northland 2.4%, and Southland 0.9%.
Affordability deteriorated in Hawkes Bay by 11.4%, Auckland 5.8%, Manawatu-Wanganui 4.8%, Wellington 3.3%, Canterbury-Westland 2.6%, Nelson-Marlborough 2.4%, Otago 0.3% and Taranaki 0.1%.
Record Median House Price For New Zealand In November 2011
Source: www.scoop.co.nz, Friday 9th December 2011
Press Release: REINZ
News Release 9 December 2011
Record Median House Price For New Zealand In November 2011
Real Estate Institute of New Zealand (REINZ) data on the New Zealand housing market for November 2011 showed 6,008 unconditional sales for the month, up 870 sales (+16.9%) compared to November last year. The November figure is 1,001 sales higher than last month (+20.0%) and rose by 4.3% on a seasonally adjusted basis.
The national median house price rose by $8,500 to $367,500 (+2.4%) in November compared to October and is also up $7,500 (+2.1%) compared with November 2010. This is a new record median house price for New Zealand and exceeds the previous record of $365,000 reached in March 2011.
All regions recorded an increase in sales volumes during November compared to October, with Northland reporting the largest increase at 33.3% and Southland the smallest increase at 6.9%. Compared to November 2010, Auckland had the largest increase in sales volumes at 26.7%, followed by Northland (+25.9%) and Waikato/Bay of Plenty (+21.5). Only two regions recorded small falls compared with November 2010, with Otago down just 2.7% and Wellington down just 1.9%.
In addition to the national median house price reaching a new record level, the Auckland median house price also reached a new record of $490,000 in November. This exceeds the previous record high of $479,500 reached in April 2011. The REINZ Housing Price Index for Auckland is now at the same level that it reached at the peak of the market in July 2007, although most other markets tracked by the REINZ Housing Price Index remain below the peak. Of note in Auckland has been the rapid increase in the number of properties being sold at auction with almost 27% of unconditional sales in November being sold at auction, an all time high for the region.
For the month of November, Hawkes Bay recorded the highest lift in prices for the month (+11.3%), followed by Otago (+5.6%) and Auckland (+5.4%). Compared to November 2010, Canterbury / Westland recorded the highest lift in prices (+9.1%), followed by Hawkes Bay (+7.3%) and Otago (+5.6%).
“The lift in volumes for November is positive following the somewhat muted sales numbers for September and October”, said REINZ Chief Executive Helen O’Sullivan. “While there may be some element of ‘catch up’ from these slightly quieter than expected months, there is a sense of buyers and sellers being ready to commit and clear the decks post Rugby World Cup before the end of the year. “
“While the data coming from the housing market is generally positive, the volume figures say recovery, not boom as some commentators have suggested. In 2007 the market reported just over 92,000 transactions in the 12 months to December; the 2011 year to date total is just under 56,000 transactions with the month of December yet to come, demonstrating that the level of activity is still well below “boom” levels. ”
“With that said, we would love to see increased supply of new homes coming through in the form of improved consent figures, as reports indicate that the lack of new stock remains a concern.”
The national median ’days to sell’ remained steady at 35 days in November, and is a five day improvement on the 40 days recorded in November 2010.
Otago again recorded the shortest days to sell at 30 days (no change), followed by Canterbury/Westland with 31 days (-1 day) and Auckland with 33 days (no change). Northland recorded the longest number of days to sell at 53 days (+3 days), followed by Central Otago Lakes at 51 days (-6 days) and Taranaki at 48 days (+6 days.) Over the past five years the median days to sell has averaged 41 days across New Zealand.
Further Data
Across New Zealand the total value of residential sales, including sections was $2.67 billion in November, compared to $2.15 billion in October 2011, and $2.20 billion in November 2010.
The breakdown of the value of properties sold in November 2011 is:
$1 million plus 227 3.8%
$600,000 to$999,999 796 13.2%
$400,000 to $599,999 1,596 26.6%
Under $400,000 3,389 56.4%
All Properties Sold 6,008 100.0%
The REINZ Housing Price Index rose 1.1% in November compared with October. The REINZ Housing Price Index recorded increases in all markets apart from Other South Island. Compared to November 2010 the REINZ Housing Price Index rose 2.6%, and the Index is now 2.3% below the peak recorded in November 2007 (see table and chart below).
Also of note is that according to the REINZ Housing Price Index, Auckland has now recovered to equal the previous peak recorded in July 2007, although most other markets remain below the 2007 peak, notably Other North Island.
REINZ Stratified Median Housing Price Index Chart
REINZ Stratified Median Housing Price Index Statistics
* CAGR is Compound Annual Growth Rate
* The Christchurch data needs to be treated with some caution due to compositional changes in the suburb mix caused by the earthquakes in the city
Editor’s Note:
The monthly REINZ residential sales reports remain the most contemporary and up-to-date statistics on house prices and sales in New Zealand. They are based on actual sales reported by real estate agents. These sales are taken as of the date that a transaction becomes unconditional and includes sales as of 5:00pm on the last business day of the month. Other surveys of the residential property market are based on information from Territorial Authorities regarding settlement and the receipt of documents by the relevant Territorial Authority from a solicitor. As such, this information involves a lag of four to six weeks before the sale is recorded by the Territorial Authority.
The REINZ Monthly Housing Price Index is calculated using a technique known as stratification, which provides an averaging of sales prices for common groups of houses. This approach is considered a more robust analysis of actual house price trends and was developed in conjunction with the Reserve Bank.
The REINZ Monthly Housing Price Index is based on a value of 1000 in January 1992, the first month for which electronic information is available. Changes in the index represent movements in housing prices, where the mix of sales between the groups is held constant and are more likely to reflect genuine property price movements.
Regional Commentaries – November 2011
Northland
The Northland region saw the strongest lift in sales across all regions in November compared to October, although this comes after a significant fall in volumes in October. Compared to November 2010, Northland had the second strongest lift in volumes across all regions in New Zealand.
Prices have also continued to firm in Northland during November following on from a modest lift in October. The median price across Northland has increased by $15,000 since September.
The number of days to sell for Northland eased by three days to 53 days in November compared to 50 days in October, however, the number of days to sell improved by eight days compared to November 2010.
Auckland Region
The Auckland region recorded a new record high median house price in November with a 5.4% lift compared to October 2011, the third highest increase across all regions in New Zealand. Particular price strength was recorded in Manukau City and Auckland City. The Auckland region also recorded the strongest lift in volumes across New Zealand compared to November 2010 and the fourth strongest lift in volumes compared to October 2011.
Agent reports indicate that listings remain relatively tight, and very good results being achieved at auction. As noted above almost 27% of all sales across the region in November were auctions, a record high
The number of days to sell for Auckland remained steady at 33 days in November compared to October, however, the number of days to sell improved by two days compared to November 2010.
Waikato/Bay of Plenty/Gisborne
Volumes across the Waikato/Bay of Plenty region in November were stronger with noticeable increases being recorded in Waikato Country, Eastern BOP Country, Hamilton City, Mount Maunganui/Papamoa and Tauranga. The lift in volumes for Mount Maunganui/Papamoa follows on from a strong lift in October as well. While volumes were up compared to October and November 2010 median prices across the region eased slightly against the median prices from the same period, although Tauranga recorded a solid increase (12.4%) in the median price over 2010’s figures. Price increases over the previous month’s figures were seen in Rotorua with a lift of 8.1% and Gisborne City recording a lift of 12.1%.
The number of days to sell for Waikato/Bay of Plenty improved by five days to 43 days in November, compared to 48 days in October, and improved by 16 days compared to November 2010, the largest improvement of any region across New Zealand.
Hawke’s Bay
Volumes in Hawke’s Bay increased by almost 24% in November, following three months of falling volumes, indicating some degree of ‘catch up’ in the number of sales during the month. Agent reports suggest a more robust market with increasing attendances at open homes, increasing auction sales and the emergence of multiple offers on properties.
The median price for the region also increased by more than 10% in November, giving Hawke’s Bay the largest lift in the median price across New Zealand, although this also comes after the median price weakened in October.
The number of days to sell for Hawke’s Bay improved by six days to 43 days in November, compared to 49 days in October, and improved by 13 days compared to November 2010.
Manawatu/Wanganui
The Manawatu/Wanganui region recorded something of a mixed bag with a strong lift in sales volumes in Palmerston North compared to October and weakness across the rest of the region. Anecdotal evidence suggests that buyer activity in the lower end of the market is increasing with the emergence of multiple offers starting to put pressure on buyers to make decisions.
The median price across the region moved up by 3.7% compared to October, with Feilding’s median price increase by 17.5% following on from an almost 10% lift in October. The strong increase in the median price in Wanganui City follows a 22% fall in the median price in October.
The number of days to sell for Manawatu/Wanganui improved by five days to 44 days in November, compared to 49 days in October, and improved by six days compared to November 2010.
Taranaki
The Taranaki region reported a further increase in sales volumes in November following on from a solid increase in October. Most of the strength in activity is in New Plymouth; with the sharp rise in sales volumes for Hawera following on from a drop in October. As has been the case in a number of regions a rise in sales volumes has been accompanied by an easing in the median price.
Anecdotal evidence suggests that buyers are becoming more active in the region, although listings continue to be in short supply.
The number of days to sell Taranaki eased by six days to 48 days in November, compared to 42 days in October, and improved by one day compared to November 2010.
Wellington
Volumes across the Wellington region rose in most markets with Eastern Wellington continuing its strong lift in volumes from October and Central Wellington also recording a further lift in volumes. Southern Wellington also recorded a sharp lift in volumes after a modest increase in October.
The median price across the Wellington region eased back, with most of the drop being recorded in the northern and western parts of the region and median prices generally firming in the centre and to the east. Wellington recorded the worst price performance of all regions compared to November 2010.
The number of days to sell for Wellington eased by one day to 34 days in November, compared to 33 days in October, and improved by two days compared to November 2010.
Nelson/Marlborough
Volumes in the Nelson/Marlborough region increased only modestly in November and follows on from a very minor increase in October. Volumes increased more strongly in Nelson and Richmond, after falling back in October.
The median price across the region eased back by almost 4.0% compared to October but held steady compared to November 2010. Anecdotal evidence suggests that buyers in the region remain cautious, although there is increasing interest from buyers coming from other South Island locations.
The number of days to sell for Nelson/Marlborough eased by five days to 38 days in November, compared to 33 days in October, and improved by 11 days compared to November 2010.
Canterbury/Westland
All markets in Canterbury/Westland apart from Rangiora recorded and increase in sales volume in November, although the region overall recorded a lower increase in sales than the national total. Sales volumes were stronger in Mid Canterbury, South Canterbury and West Coast.
Agent reports indicate that the Christchurch market has steadied after an initial influx of listings at the beginning of spring, with the overall number of listings easing back. Red Zone buyers are showing strong interest in the proposed new subdivisions, although the time taken for these new developments to grind through the approval process is seeing some buy an interim property with the plan to purchase again later in the new subdivision.
The median price for the region has increased by just over 9.0% compared to November 2010, and Christchurch City also showing an increase in the median price of more than 9.0%. Markets close to Christchurch City have also shown strong increases in prices compared to November 2010, with markets further away showing lower price increases.
The number of days to sell for Canterbury/Westland improved by one day to 31 days in November, compared to 32 days in October, and improved by 10 days compared to November 2010.
Central Otago Lakes
The Central Otago Lakes region recorded a 25% increase in sales in November compared to October, although this came after a drop in sales volume during October. Compared to November 2010, volumes are up strongly in Central, although slightly weaker in Queenstown. Anecdotal evidence suggests that there is still a shortage of listings in the region, with an increasing number of frustrated buyers in the market, particularly below the $600,000 level.
The median price across the region eased in November, after a 9% lift in October, although the median price is continuing to weaken in Queenstown.
The number of days to sell for Central Otago Lakes improved by six days to 51 days in November, compared to 57 days in October, and improved by five days compared to November 2010.
Otago
Sales volume in Otago rose at about half the rate of the national lift in volumes compared to October, with the region recording the largest fall in sales volume across the country compared to November 2010, although North Otago recorded a strong lift in volumes compared to November 2010.
The median price across the region improved by more than 5% compared to October, with North Otago again showing some additional strength in the rise in the median sales price. Anecdotal evidence suggests that market is most active at below the $200,000 level with a continuing shortage of listings frustrating buyers.
The number of days to sell for Otago remained steady at 30 in November, with Otago recording the lowest number of days to sell across New Zealand. The number of days to sell improved by five days compared to November 2010.
Southland
The Southland market recorded another modest increase in sales volume compared to October, which was a modest increase over September. The much larger increases in sales volumes reported for northern regions has not been reflected in the deep south. The Gore market was strong in November compared to October and November 2010, although the Invercargill market was relatively weak.
The median house price eased across the region in November compared to October, although this comes after a strong lift in prices during October.
The number of days to sell for Southland eased by nine days to 40 days in November, compared to 31 days in October, and also increased by three days compared to November 2010.
Queenstown's Walter Peak Estate on the block again
Source: Duncan Bridgeman, The National Business Review, Thursday 20th October 2011
The high profile Walter Peak Estate development on the shores of Lake Wakatipu is on the market again.
Receivers for Strategic Nominees, owed more than $20 million on the project, have instructed Harcourts to sell the property in a mortgage sale.
The 38ha property was formerly owned by bankrupt developer Rod Nielsen and Justin Russell’s company, Walter Peak Developments.
Mr Neilsen bought the land in 2006 for $10 million with the aim of building a luxury lodge, eight homesteads and eight cottages.
In 2008 his attempts to sell the property failed and the company went into receivership and liquidation.
The land sits next to Walter Peak High Country Farm, owned by tourism company Real Journeys as a tourist attraction.
Walter Peak Estates has consent for construction of a fully integrated “semi-wilderness experience” estate including a lodge, manager’s cottage, guest cottages, and luxury homesteads along 820m of lake frontage.
The core development has been completed with Strategic Nominees, a division of Strategic Finance, funding its receivers to undertake landscaping works.
Harcourts Queenstown agent Warwick Osborne said he expected interest from developers, investors, property syndicates, hotel/lodge operators, expat’s and land bankers.
“Properties like these are scarce in the world. The consent process was involved and extreme, but is now complete, so the purchaser will be able to move forward with the process,” he said.
Two of the nine sites on the 38.16ha are not part of the mortagee sale, although possibly could be purchased at the same time.
New valuations on the property’s seven titles come to $6,215,000, down from $9,560,000 three years ago, Queenstown’s Mountain Scene newspaper reported.
Walter Peak Estate MORTGAGEE Sale
Source: business.scoop.co.nz, Thursday 20th October 2011
Harcourts instructed to sell world renowned Walter Peak Estate by MORTGAGEE sale
The Mortgagee has instructed Harcourts Queenstown to sell seven of the nine titles at the world renowned Walter Peak Estate by Mortgagee Deadline sale and it is on the market.
This high profile property has consent from the QLDC and the Environment Court allowing for the construction of a fully integrated semi-wilderness experience estate including a lodge, manager’s cottage, guest cottages, and luxury homesteads along its 820 metre Lake Wakatipu frontage.
The potential development is currently bare and Harcourts Queenstown says they expect a large amount of interest. Previously owned by a Queenstown developer, the core development of the site has been completed, and infrastructure in place with thousands of native trees planted – a key advantage to a buyer.
The buyer will have many options, including the development of a lodge, luxury homes, cottages and a manager’s residence. A key benefit of this mortgagee sale is it comprises of seven titles, giving potential buyers so many options going forward.
“Based on our expertise in high profile land sales we expect to receive global interest from developers, investors, property syndicates, hotel / lodge operators, expats and land bankers all with a focus to deliver a wilderness experience,” says Harcourts Queenstown agent Warwick Osborne.
Mr Osborne has prior history selling the property and says the site is prime New Zealand real estate in the area, and would be a true top end wilderness experience with peace and quiet, yet so close to Queenstown by boat or helicopter.
“Properties like these are scarce in the world. The consent process was involved and extreme, but is now complete, so the purchaser will be able to move forward with the process.
Last for sale in 2005, the site is 38.16 hectares comprising of nine sites, with two sites not part of the mortgagee sale, however, there is the possibility to purchase those two lots. The site, adjoined by Beech Bay Road to the south, has an approximate 820 metre frontage to Lake Wakatipu on the north and is 1.5km from Beech Bay and the wharf where the TSS Earnslaw docks.
In 2005, after negotiation with neighbours, interested parties and consultation from such parties as James Lundy (Design Consultants), Morgan Pollard and strong involvement from the Wakatipu Environment Society with strict adherence to the consent process, a solution that fitted the landscape was approved.
“The council consent in 2001 gave approval for 45 house units. The current consent gives approval for 17 buildings. This reduction fits the site better and reflects the maturing of the market for top end property,” says Warwick Osborne.
In brief, the agreed and original concept has two development regions. Firstly, within the Mick O’Day Creek Basin, a lodge building that incorporates guest suites, separate manager’s residence and eight cottages. Secondly, along the terrace face, eight homestead sites.
Several generic designs for the buildings have evolved over the years, but it has been agreed that each building should be specifically designed to fit its location and fit to the contour of the land. The consent provides for flexibility, although each design will be subject to approval by a Design Review and Approval Committee.
Walter Peak is now on the market and will be an attractive asset to a visionary buyer wanting to create their own wilderness experience.
Visit www.harcourts.co.nz/QT2997 for more information.
Walter Peak Estate up for mortgagee sale
Souce: Olivia Caldwell, Otago Daily Times, Friday 21st October 2011
Walter Peak Estate, across Lake Wakatipu from Queenstown, is back on the market, after plans to develop it into a luxury resort failed.
Now based in the United States, former Aucklander Rod Nielsen bought the 38ha of land for $10 million in 2006, but the venture went into receivership three years later.
The developers had plans to transform it into a $50 million luxury estate and had already laid underground sewerage pipes and planted thousands of trees on the property.
Now, seven of the nine titles are on the market and will be offered in a mortgagee sale next month.
The property had consent from both the Environment Court and Queenstown Lakes District Council for the building of a "semi-wilderness" lodge along 820m of Lake Wakatipu frontage.
According to receivers at PFK Recovery, an estimated $25 million is owed to creditors.
Mr Neilsen had a home in Queenstown and bought Walter Peak Estate in 2006 for about $10 million off Ian Koblick.
He had joined forces with Justin Russell's company Walter Peak Development Ltd, but the pair had since reportedly fallen out.
Mr Nielsen also had property at Queenstown's Lake Esplanade, which recently went into receivership.
In 2008, he sold several Wakatipu properties to concentrate on his overseas developments, and one year later he was announced bankrupt.
Harcourts Queenstown will sell the Walter Peak property on behalf of the receivers.
Agent Warwick Osborne expects considerable interest from around the world "from developers, investors, property syndicates".
He said the present consent approved 17 buildings.
Last offered for sale in 2005, the new valuations on the property's seven titles total about $6 million. The sale deadline is November 23.
Property market steady for month
Source: Tracey Roxburgh, Queenstown Times, Friday 21st October 2011
It was a case of "steady as she goes" in the real estate scene in Queenstown last month, with the September sales volume similar to the average for the preceding nine months of 2011, Real Estate Institute of New Zealand Queenstown spokesman Kelvin Collins said.
In his report for September, Mr Collins said total value of sales was up 14%, indicating a stronger demand in "upper price brackets" with five house sales for prices of more than $1 million.
There was also good demand for quality sections, with five sales of sites more than $500,000.
"This demand may also be a reflection of a competitive building industry and availability of builders with buyers preferring to build rather than renovate an existing property," Mr Collins said.
"There has also been demand from offshore residents and expats securing a property now, with the idea of building later.
"There was an absence of Australian skiers buying town apartments towards the end of the month, which could be a reflection of a perception Queenstown was full because of the RWC or concerns about the global economy."
Listing activity increased slightly with spring - 90 properties were listed for sale in September - but stock levels could still be considered "tight", with generally reduced numbers of properties coming on to the market to replace properties sold, he said.
Auctions - the hottest ticket in town
Source: Rebecca Stevenson, www.stuff.co.nz/business/money, Monday 22nd August 2011
The overall property market may be a little sluggish still in some parts of the country but property auctions are running hot.
Recent statistics from the real estate industry have proved what many potential house buyers have probably discovered - properties selling at auction are becoming more mainstream.
June and July saw the number of residential properties up for auction at a four-year peak, according to industry website realestate.co.nz, with 1168 homes up for auction in June and 1132 in July against a typical month of about 600 auction listings.
Auckland, always at the forefront of any property trends, saw one in five listings going to auction over the past two months and accounted for 56 per cent of the 1132 national auction listings in July.
TradeMe's Paul Ford said auction listings had "ticked up" in recent months on the site, with the most noticeable rise occurring in July, which recorded a boost in auction listings of 25 per cent on the previous month.
This increase was both because of the lift in the number of auctions listings but also because of a decrease in total listings, meaning auction listings increased proportionally, Ford said.
The increase was driven by listings in Auckland, Waikato, Christchurch, Bay of Plenty and Otago, Ford said.
These trends have been noticed by agents.
Ray White's Carey Smith said the national real estate group had seen a "substantive" lift in the group's auction listings, from 460 to 607 in the last quarter.
"The Ray White Group was appointed to over 20,000 controlled listings per annum and during 2011 14 per cent of those have been by auction and during the last quarter, this has lifted to 21 per cent," Smith said.
But are the properties at auction selling?
Yes, said the BNZ Real Estate Institute's residential market survey released earlier this month.
The survey, which collates data from the institute's members, said that agents believe more properties are selling at auction after holding negative views of auction sales in May and June.
BNZ chief economist Tony Alexander said while this wasn't an actual figure for completed auction sales it showed agents' perceptions had switched to being positive about auction sales.
Again, Smith agreed and said Ray White's "under hammer success rate" had gone from 58 per cent a year ago to 71 per cent now for auctions.
But why the sudden popularity of the auction? And what are the benefits and potential pitfalls of auctions, for sellers and for buyers?
Smith had some ideas.
"Auctions are providing vendors with the ability to polarise the buyer pool into a set time frame. With the reduced amount of stock on the market, auctions are also showing an increased response rate from buyers attending open homes and also registering to bid for properties."
In short, an auction draws a line in the sand that both seller and buyer have to adhere to.
Once the auction date is set, it's all on.
Because auctions are unconditional sales all the legwork has to be done in the lead up to auction day. That includes investigating the condition of the property, possibly organising a builder's report, reading through the paperwork like unit title and body corporate information if its an apartment or unit and most importantly, arranging your finance so you are ready to roll on auction day.
That's because if you are the winning bidder you are required to sign an unconditional cash deal on the day - if, of course, the seller's reserve has been met.
Harcourts' national auction manager Richard Valentine said auctions add impetus and urgency to the process that's good for both parties.
He said buyers can be sure they are dealing with motivated sellers, who have invested in marketing campaigns to get a result.
"In addition, at an auction buyers can compete on an equal footing with others and everything is out in the open. They can track their competitor's bids and control theirs - and if their bid is accepted it's a done deal in a very timely and straightforward fashion."
Anyone who has played the "multi-offer bid game" will know how appealing a blunt bidding duel can be in comparison.
For vendors the unconditional cash sale at auction is clearly appealing and it should also flush out more buyers, some of whom can get caught up in the moment of competing against other bidders and end up paying more than they might have offered in a less heated environment.
Smith said there had been specific examples at Ray White where an auction had "pepped up" buyer demand.
"At a recent auction held by Ray White Ponsonby price expectations were exceeded by almost 20 per cent. This was directly attributed to the auction form of marketing."
The pros and cons
Pros
No secret negotiations. An auction puts the sale process all out in the open, you are either the highest bidder - or you're not, and your property has either sold, or it hasn't.
There is no shadow boxing with another bidder, and trying to guess which magic number will secure you the property over and above someone else. For a seller, you know how much you are going to get within a matter of minutes and can control the price by setting a reserve.
You can plan ahead. Because you know when and where the auction is happening planning your strategy, including your top dollar, should be a breeze. You also must have all information to hand from the seller about the property and have any reports you have commissioned completed.
Show them/me the money. If you buy at auction the sale is unconditional, including your finance, so you have to get this organised in advance. The upside is you know what you can afford to bid and there is no anxious wait for bank approval. Of course, this is also great for the vendor.
Cons
Caught up in the moment. The auction bidding could get heated and take you, and your budget, along with it with the end result that you pay more than you had budgeted for. (This is probably a pro for the vendor, however)
Who's that bidder? Yes, it's the vendor. The vendor/auctioneer can bid against you until the reserve is met.
Out of pocket. You have had a building inspector in and had the lawyer go through the paperwork. Then you miss out at auction. Unfortunately, these bills still need to be paid.
Unconditionial. No conditions on the sale that will safeguard the buyer if something later turns out problematic such as leak issues.
House sales improved in May
Source: Otago Daily Times, Wednesday 6th July 2011
Queenstown residential real estate sales returned to a more normal set of statistics for May, the Real Estate Institute of New Zealand (Reinz) says.
Reinz Queenstown spokesman Adrian Snow said in a statement that April was a standout month, with 57 dwellings plus sections sold.
This was only matched by one other month in the post-December 2007 recession period, Mr Snow said.
"May's results of 35 dwelling sales and five section sales returns to what we now expect as normal results in what is now a relatively stable nine-month period of sales activity.
"Compared with April, the percentage changes of our recorded statistics are showing significant decreases, but rather than May being a poor month of sale activity, the changes only highlight that April was an extraordinarily good month, with May returning to the normal activity levels."
Reinz reported there were 35 dwelling sales for May, down on the 57 for April, but a notable improvement on the 23 dwellings sold in May 2010.
There were five sales of sections in May, compared with 15 in April and 13 in May last year.
Total dwelling sales plus section sales of 45 for May compared with 72 for April, but were a quarter more than the 36 for May.
Values of total residential dwelling plus residential section sales for May 2011 were $27,312,000, down on the $45,606,400 for April, but similar to the $27,060,525 for May 2010.
The median sale price for May this year was $500,000, down on $520,000 for April and $570,000 for May last year.
"The median sale price does fluctuate from month to month because of the small data set, but the general trend over the last four years has been for a gradual decline in median sales value," Mr Snow said.
"The decline in median values agrees with the Reinz national housing price index trends showing a 0.7% fall for May 2011 compared with May 2010 and being 5.8% below the peak index value in November 2007."
Mr Snow said there were four sales of more than $1 million with one sale more than $5 million and two lifestyle land sales of more than $1.5 million recorded in the rural statistics database.
This showed the high value end of the market was relatively strong, he said.
"At an anecdotal level, inquiry and activity with purchasers has declined from the February to March period, with these declines being regarded as normal for the quieter between-season months of May and June."
45 million reasons to be smiling...
Source: Mountain Scene, 2nd June 2011, Philip Chandler
Wakatipu real estate agents are smiling again as sales figures hit a two-year high. Seventy-two Wakatipu residential sales were recorded in April. That’s the highest number since 75 in April 2009. The previous high of 76 came in November 2007, just before the global credit crunch. This April’s 72 sales were 20 ahead of the month before, but the increased value of sales is even more impressive. Residential sales totalled $45,606,400, up 65 per cent on the March figure of $27,694,300.
That healthy sum was bolstered by seven $1m-plus sales. The highest was $6m fetched for the Mountain View Road home of Aucklander Eric Faesenkloet, who owns The Golf Warehouse. A 1970s home designed by local architect John Blair, it was redeveloped by Faesenkloet, who again engaged Blair. The sale, to an offshore party, was brokered by local Sotheby’s International agent Russell Reddell.
April’s 72 sales also included 10 sections at Jack’s Point, where there was a cheap-priced bulk auction in March.
As well as those residential sales, April also saw six rural properties sold. Five of those were also $1m-plus sales, including unsold lots at the Lake Hayes Bendemeer subdivision which went for almost $12m. The buyer, Dunedin-based Paul Nicholson, has only paid a deposit so far but that’s enough to record a sale, local Real Estate Institute of New Zealand media spokesperson Adrian Snow says. Snow calls April’s figures “a very healthy result, arguably following the trend in sales that Auckland has been experiencing over the last few months”.
“Queenstown’s real estate agents are optimistic that the number of sales and in particular the increased number of high-value sales is showing us that the recovery phase of the market cycle has initiated.”
Snow concedes that April 2011, like April 2009, could just be a one-month blip. “But what we’re seeing in the marketplace is that enquiry has been running relatively strongly over the last two months and our buyers do appear to be a bit more decisive.
“But I don’t think anyone has any expectations that numbers of sales are going to increase significantly, or the price – they’ll both just gradually improve.”
Market conditions still favour the buyer, Snow believes, “although with lower stock levels, good quality well-priced properties are receiving good attention from the marketplace”. Snow also cautions that the market is entering a traditionally slow time of the year, and that median prices remain stable.
Local Sotheby’s International agent Julian Brown says his company’s May figures, like April’s, were “very good”. “We had very good volume in the high-end market, certainly over the last few months, but it’s due to the buying opportunities that are available.” He estimates prices for local high-end property have come back 20 to 30 per cent from the height of the market in 2007. Offshore buyers were also attracted by the favorable exchange rate, Brown says.
Consistency seen in property market
Source: Otago Daily Times, 25th April 2011, Tracey Roxburgh
Consistency in sales records in March was being viewed optimistically by real estate agents and was expected to be one of the key indicators of an "improving market," Real Estate Institute of New Zealand Queenstown spokesman Adrian Snow said.
Inquiries from buyers had been relatively strong and consistent over the past two months, indicating good numbers of active buyers in the market. However, they were acting "very prudently" and taking a relatively long time to research the market and make their buying decisions, he said.
"As a result, buyers are typically choosing not to interact with vendors whom they perceive to have overpriced properties and negotiations are often longer than would otherwise be expected.
"As shown in this month's sales records, good numbers of properties are changing hands, indicating a relatively healthy market, although a relatively slow travelling one."
Forty-one residential dwellings sold in March, 8% up on February (38) and 2% up on the 40 recorded in March 2010.
Five apartments sold in March, the same number as in February and two down on March 2010.
Mr Snow said apartment sales appeared to be "transacting consistently" around that number for the past two years.
There were 11 residential section sales recorded in March, consistent with the past seven months' activity, with sale numbers ranging between 11 and 15 since September 2010, excluding the "very poor month of January".
Nine of the 11 sections sold were from the recent bulk Jacks Point auctions, which left a "relatively poor number from the balance of Queenstown".
The value of sales was 14% down on February but 10% up on March 2010, with the median dwelling price down 10% from February, but showing no significant change when compared to March 2010.
The median days to sell had decreased 16% from 64 days for February to 54 days for March, which was also a decrease of 4% compared to March 2010.
"This indicates an increase in the speed at which buyers are meeting sellers, being either buyers being prepared to purchase sooner or vendors becoming more realistic with prices, or a combination of both."
"Eighty-three percent of the recorded dwelling sales were below $700,000, which indicates a definite bias in the market to the lower value properties," Mr Snow said.
A trophy land bank near the lake put up for mortgagee sale
Source: Mountain Scene, Thursday 17th March 2011, Philip Chandler
Strong interest is expected in the mortgagee sale of 41.6 hectares of lake-facing land at Bob’s Cove, near Queenstown.
The parcel – covering both sides of Glenorchy Road, 12km from Queenstown – is bordered by Punatapu Lodge in the east and Fisherman’s Lane to the west.
It was originally marketed for a residential/resort development called Bob’s Cove Nature Reserve by Bob’s Cove Ltd.
The company – associated with now-bankrupt developers John Reid and father and son Dan and Kelly McEwan – developed 15 elevated rural residential house sites on the top side of Glenorchy Road.
From 1600sq m to about 3800sq m each, they were marketed for about $600,000 a pop but none sold.
On the 29ha lake side of the road, Bob’s Cove Ltd planned up to 89 lots, resort facilities like a hotel, restaurant, bar, gym and indoor swimming pool, and a nature reserve.
However, as the credit crunch hit, second mortgage holder Strategic Nominees, which was owed $10,221,595, called in receivers two years ago.
First-ranking mortgagee New Zealand Guardian Trust – owed $5,223,000 – has now instructed Harcourts Queenstown agent Warwick Osborne to sell the property.
“Without a doubt, this land has that ‘X’ factor,” Osborne says. “It is a large parcel and will attract very good interest based on its location."
“It’s scenic and close to Queenstown, and that’s why you see so many beautiful homes being built in places like Alpine Retreat and Closeburn, and lodges out there like Matakauri, Punatapu and Blanket Bay.”
Osborne identifies four types of prospective buyer. First up are developers “who will potentially do something with it – though there are not as many developers as there once were”. Two other categories are property syndicates, and “astute investors” who might land-bank the property for the future.
“Then we’ve got people who are just looking for a trophy bit of land close to Queenstown where they could build a very upmarket home,” Osborne says.
“Over time they might reduce the risk of the project by selling off the 15 lots across the highway.”
Osborne doubts the land will be intensively developed – “maybe less is more”.
The mortgagee has committed “a very strong-profile marketing budget to go global in a number of online publications and print media”, he says.
The sale deadline is April 15 though prior offers will also be considered, Osborne says.
Osborne has successfully sold several tranches of development land round Queenstown over the past two years, including three sites below Frankton Road.
Please view the listing at www.harcourts.co.nz/QT2771
Resort property ray of hope
Source: Mountain Scene, Thursday 17th March 2011, Philip Chandler
A new report offers hope for the Queenstown economy despite the gloomy state of the international financial environment.
Colliers International argues the resort is well-placed for the future because it has continued growing in the face of the global economic crisis.
The conclusion comes in the property consultancy’s “Queenstown Market Overview 2010-2011” being launched tomorrow.
“The Queenstown area continues to grow in the face of a difficult economic environment, which puts the market in a strong position to grow as domestic and international economies recover,” the report states.
“This year we see some very positive indicators towards a faster rate of recovery for the Queenstown economy and property market.”
Examples at Frankton Flats are the $50 million stage one of the Five Mile shopping centre, $24m of airport work over the next two years, the final stage of the Remarkables Park retail development and rezoned commercial and industrial land.
The report also cites that Queenstown Lakes District Council is budgeting to spend about $42m on infrastructure, building consents have risen $30m last year, there’s upward pressure on CBD ground-floor rentals and also continued high growth in the resort’s permanent and visitor populations.
“All of that stuff leads to economic growth even though it’s been a bloody tough time”, local Colliers sales broker Mark Simpson says.
“We’ve been smacked over the knuckles on a couple of big development projects but that doesn’t reflect the nature of our economy as a whole.”
Simpson’s colleague John Scobie also says low land, funding and construction costs – assuming builders are available – are encouraging house construction.
But the report also touches on the low volume of residential property sales.
Sales last year were about 50 per cent of those recorded in the peak years of 2002 and 2003.
Some apartme |
