Hawkes Bay Property Investment Market
We do get asked a lot by out of town investors on our knowledge and opinion of the Hawkes Bay urban property market. So here it is: Over the past two weeks there have been plenty of articles in the local paper (HB Today) on facts that impact any residential property investor’s future. Let me just list the points.
Hawkes Bay currently has the lowest inventory of houses for sale in the whole of New Zealand.
Over the year to April inventory dropped by five weeks to now eight weeks of supply. “Stock levels are the lowest I have ever seen” (says Leaders’ Eleonor McDonald)
DAYS TO SELL
The 10 year medium is 46 days. This April it was down to 32 days.
Figures of 12 to 14% were quoted – April ’17 on April ’16
Down by 26% – April ’17 on April ’16
OFFERS ON PROPERTIES
can be $50,000 apart!
There are fundamental facts that make it so unlikely in the near future for this demand to change:
although we are not in an urban area comparable to Auckland or Wellington, LAND IS SCARCE. Anecdotal evidence suggests that builders are buying properties on large sections so they can subdivide and build, so they are not out of work because they are unable to source sections to build on. More importantly a recent article in HB Today described in great detail, that Council is reluctant to make extremely fertile land in the Heretaunga Plains available to build houses on. For obvious reasons. They plan to “dramatically reduce development levies for infill development” to preserve fertile land.
Our local industries are going strong and new negotiations along TPPA without the USA bode well for our food production sector and wine industry.
Projections for population and household growth is not expected to slow for 30 years, the previous projection of 2,500 new houses needed by 2045 have been upgraded to 11,000 and the expected population growth has been upgraded from an expected 8,000 to 16,455. The plan is to cover that strategically by 60% intensification in existing areas,35% greenfield and 5% in rural areas.
All of this tells me: The current trend affecting house prices increases (as well as rents!) is not going to abate in a hurry.
From my own practice I can say: When I have looked at properties on behalf of investor clients looking to buy rental properties I have been surprised by the price increases. I have also recently been unpleasantly surprised by the condition of a property for sale which would need substantial renovations before it could be rented well and the associated price tag.
From our experience we can also say that rental demand is the highest it has been for more than a decade. In the medium range of three bedroom family homes for rent and relatively affordable two bedroom units more often than not it only takes one viewing to find a suitable tenant. At times we had to withdraw the ad before the first viewing because we had a full list of prospective tenants wanting to view and the phone kept ringing.
Tenants who lack information needed to assess their suitability and large family groups especially find it extremely hard to find a home. It is not uncommon, that we have several suitable applicants and still have to turn some away.
Please note that the opinion and quotes provided here are not meant as financial advice and can never substitute individual due diligence. We are property managers and investors, not financial advisers and not involved in buying or selling properties.