Values for beach front properties in three areas close to Auckland have stabilised and are starting to recover after drops of up to 22% between 2007 and 2009, real estate firm Bayleys says.
Bayleys looked at properties with uninterrupted beach access in the Coromandel, Waiheke Island and Rodney District, where values had fallen by 10%, 14% and 22%, respectively, in the two years to the end of 2009.
“Values in some areas are bouncing back after falling between 2007 and well into 2009,” Bayleys reseach analyist Sarah Davidson said.
“The last 12 months have shown a turnaround in value movements in the three surveyed coastal markets - with the downward correction slowing on the Coromandel Peninsula, and reversing in Rodney District and Waiheke Island," she said.
“Values on the Coromandel have held relatively steady. Rodney values have recovered 15 percentage points of their lost ground, while Waiheke values are back up nine percentage points.
“A combination of a downturn in property markets and the economy meant an adjustment in all real estate prices was inevitable. The recession put pressure on discretionary spending - including the buying of holiday homes - and reduced demand for absolute waterfront and coastal property.”
“The previous surge in demand for coastal property, particularly in the mid 2000s, also resulted in a major increase in developer activity in this sector of the market, as properties such as camping grounds and lifestyle sections were converted to residential lots.
“This led to a marked oversupply of coastal subdivisions which, in combination with reduced demand, resulted in a substantial reduction in prices, with a number of mortgagee sales contributing to this.”
Values for these types of properties - particularly sites in lesser locations away from the beach - had fallen more than absolute waterfront properties, Davidson said.
“The limited number of properties right on the beach and the fact that they are tightly held, often passing from one generation of family owners to the next, has meant their drop in prices has been less pronounced,” she said.
"As a consequence of the exponential value growth over nearly 30 years, absolute waterfront property had proven to be an exceptionally well performing investment vehicle - with annual average capital growth of 13.6% on Waiheke Island, 15.7% on the Coromandel and 17.3% per annum in Rodney District.
“When accounting for inflation, real compound returns on absolute waterfront investments have been between 9.2% and 12.9% per annum, which puts them ahead of returns from many other investments even before taking into account the lifestyle benefits.”.
Davidson said that despite the volatility of values over the past three years, the fundamental factors which underpinned absolute waterfront land values were still present – with limited supply of properties available for purchase right on the water being the major driving factor.
“As such, it is likely that this sector of the property market will continue to outperform the general residential property market,” she said.
9 Comments
"....properties with uninterrupted beach access in the Coromandel, Waiheke Island and Rodney District, where values had fallen by 10%, 14% and 22%, respectively, in the two years to the end of 2009."..........sorry did that say "where values had fallen"....Olly please explain...!.
And that's without including the fall in the value of the Dollar...about 6% over the two years due to inflation.
"....a marked oversupply of coastal subdivisions which, in combination with reduced demand, resulted in a substantial reduction in prices, with a number of mortgagee sales contributing to this.”........oh so property doesn't always go up in value.....wow!
".....the downward correction slowing on the Coromandel Peninsula".....oh well then that's definitely on the rise...doh
Everybody knows that areas like Coromandel and Marlborough have been greatly overrated, as essentially they are a backwater with a little economic growth, hence the decline, with large numbers wanting to sell and few buyers. Olly should accept the figures as the reality. But middle of the road properties in well located areas in NZ are holding up much better than the doomsters predicted, and Olly does make some pertinent observations
Get it right me....Marlborough has had massive growth in the wine sector since the 80s...it was that which drove the bubble down here until the advent of the credit splurge under Labour sent it into orbit....then the GFC hit and is still underway...which triggered the fall in demand for wine, which hit at the same time as grape output boomed...on the back of a huge borrowing binge by plonkers dreaming of stupendous wealth. QED Humpty got shot off the wall and the shattering crash is underway...banks left holding vineyards they loaned way too much on....falling regional demand for labour...exodus of families dependent on those jobs and down goes the property bubble with a crash.
The Coromandel is a very different beast.
I'm sitting in my parents water front property in Whangaroa , far North. Pristine views seconds from the marina. 10 properties in the street.
4 of them for sale and have been for the last 6 years.
Should be easy to sell, yeah right.
Nice place to visit not so nice it you don't have money.
How does this fit into the mix of things ?
Well look at the above post by Me, Whangaroa sounds like another example of the likes of Coromandel, nice natural environment but economic backwater that few desire to go to live there. Have just read the BNZ Weekly Overview, which indicates actual annual consents for new houses are running at 6,700 below what is required, plus stock of houses reduced by the earthquake, while leaky homes are further reducing the supply that will be available. BNZ says, as these factors work through by second half of 2011, there will be price rises- may not in places like Whangaroa, but certainly in areas of economic activity and in-migration.
Bayleys were careful to say beachfront properties only which is a very small percentage of coastal properties. It really is about supply and demand and those properties are far and few between within 2 hours drive from Auckland so will always be in demand to some degree. I just feel sorry for the thousands who bought property (Not directly on the beach) and have seen there values drop by up to 50%
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