Housing shortage motivates new home owners to look at 'build from scratch' options
A shortage of new housing stock coming onto the residential real estate market for sale is motivating prospective home owners into looking at starting ‘from scratch’ in their quests to find a property.
The latest Real Estate Institute of New Zealand report just out highlights that while the number of residential properties being listed for sale has shown a slight month-on-month improvement, the levels are still far below historical highs.
The May figures note: “A common theme amongst real estate agents in Auckland (including Rodney District) is the low level of new listings and increasing buyer frustration in finding properties that meet their needs.”
As a consequence, a substantial number of prospective home owners are struggling to find properties which meet their criteria, and are subsequently turning to design-and-build options instead – purchasing bare land plots and contracting in home construction companies.
Leading real estate agency Bayleys in the North has noticed an 13 percent upturn in the number of sections coming onto the market in the Rodney region just north of Auckland – with eight such sites being combined into an auction next month.
The properties range in location from the semi-suburban Whangaparaoa Peninsula, through to the holiday enclave of Omaha, and even a rural waterfront plot in Northland. Two of the bare land sites are cliff-top locations, while one overlooks the high-class Gulf Harbour golf course.
Bayleys in the North director Kirsty Stevenson said it was unusual for such a
group of sections to come onto the market simultaneously. The sections are to be consecutively auctioned at the company’s Orewa offices on July 7.
“Usually a group of sections like this only comes onto the auction market through one vendor owning multiple sites and pursuing a large-scale selldown – such as those Bayleys ran in Manganui and Mangawhai in recent years,” Ms Stevenson said.
“However, this group of eight sections are all owned by separate vendors who independent of each other saw a growing trend in the property market, and have instructed us to take advantage of the low number of homes being listed for sale.
“Residential listing numbers traditionally fall during the winter period as vendors assume buyer interest withers. However, that fall in vendor numbers has been so significant this year that the supply and demand curve is now totally out of equilibrium.
“As a result, the feedback we’ve had from buyers is that if they can’t find what they’re looking for, they’ll simply buy the land and build it themselves. That’s a message which has obviously flowed through to section owners.”
While auction reserves have yet to be set for the eight sections – a process which normally takes place in the day preceding auction - Ms Stevenson predicted the pricing levels would begin at somewhere around $200,000 mark… making home and land packages affordable at both the entry level and high-end markets.
Figures from Statistics New Zealand support the design and build trend - reflecting that residential building consent numbers are up 2.2 percent in the latest recorded month. The ANZ’s most recent Property Review report says that figure would have been considerably higher, at 8.1 percent, except for the sluggish Christchurch market skewing the data.
The demand trend toward house and land packages has seen ‘off plan’ home builder Generation Homes record a 75 percent rise in buyer enquiries since the end of summer.
Joint venture director for the company’s North Auckland operations, Paul Barker, said that between 20 – 25 groups per weekend were now visiting the region’s showhome in Millwater – with most interest in three and four bedroom single-level properties.
“The comments we are getting is that there simply isn’t the choice of residential homes for sale out there in the marketplace at present, and that people aren’t prepared to wait until the end of the year for a lift in volumes. Instead, they’re coming to us for the plans – some with land packages, some without – to lock in fixed-price house packages and get their buying process underway now,” Mr Barker said.