Palmy next in line

[marklowes]

http://www.stuff.co.nz/manawatu-stan...en-for-sellers

Been on the simmer for a while. Looks like a lot of side line sitting locals are going to be forced into buying at higher and higher prices to save paying even more next year. FHB'ing up to 350k with full kiwisaver withdrawals now possible so if you can get a stand alone for mid 200s you'll see it perform very well IMHO.

Still a few good buys about (even with very low stock) that might be overlooked by picky FHB's. Try southern PN, awapuni or highbury for yields and future growth.

[Rosco]

I often like to look at population figures.

"80,079 people usually live in Palmerston North City. This is an increase of 2,355 people, or 3.0 percent, since the 2006 Census." - from 2013 census data. So over 7 years, gaining 336 people per year. May 3 per house, so just over 100 houses needed per year. That isn't many.

http://www.pncc.govt.nz/media/2442923/long_term_projections_executive_summary__2010_.pdf



On page 4 is expected growth of 15,000 by 2031. This growth is quite a bit slower than Hamilton or Tauranga.

Overall I was surprised by the population growth estimates(better than my expectations), but would still prefer a bigger city.

Ross

[marklowes]

I often like to look at population figures.

"80,079 people usually live in Palmerston North City. This is an increase of 2,355 people, or 3.0 percent, since the 2006 Census." - from 2013 census data. So over 7 years, gaining 336 people per year. May 3 per house, so just over 100 houses needed per year. That isn't many.

http://www.pncc.govt.nz/media/2442923/long_term_projections_executive_summary__2010_.pdf



On page 4 is expected growth of 15,000 by 2031. This growth is quite a bit slower than Hamilton or Tauranga.

Overall I was surprised by the population growth estimates(better than my expectations), but would still prefer a bigger city.

Ross

That period (2006-2013) includes a time where n.z net migration turned negative (the great aussie exodus due to mining boom).

During the same period (2006-2013) rotorua lost population for example, so to still grow over 2500 mainly through natural growth isn't too shabby.

From recent immigration data around 800 people (net) from overseas are moving to Manawatu, mostly to p.n id imagine but data doesn't go to city level. This has been the case for last 2 years. Thats around 1% pop growth from migration alone. Add natural growth and internal flows and it's pretty healthy in my opinion.

But if you can buy stand alone 3 bedders in ham or tauranga for low 200s by all means, I'm picking the good buying is over in those markets hence the move to the north islands next biggest city, palmy.

[P.Bateman]

I often like to look at population figures.

"80,079 people usually live in Palmerston North City. This is an increase of 2,355 people, or 3.0 percent, since the 2006 Census." - from 2013 census data. So over 7 years, gaining 336 people per year. May 3 per house, so just over 100 houses needed per year. That isn't many.

http://www.pncc.govt.nz/media/2442923/long_term_projections_executive_summary__2010_.pdf



On page 4 is expected growth of 15,000 by 2031. This growth is quite a bit slower than Hamilton or Tauranga.

Overall I was surprised by the population growth estimates(better than my expectations), but would still prefer a bigger city.

Ross

Hi Rosco- I know you're a big Hamilton fan but I was wondering whether it is still worthwhile investing in the Tron? What I'm seeing is AKL investors pushing up prices now (especially over the last 6 months) but rents have not gone up to match so now we're seeing falling yields. We are currently looking to buy under $400k, according to RE agents that I talk to there is a lot of demand at under $350K which have moved those prices up. Do you see this investor demand top out at $400K due to lower yields and uncertainty around continued capital gains in Hamilton? Or do you think it will be like Auckland where investors see the capital gains and prepare to accept lower yields?

Marklowes- what are your thoughts on the Roslyn area vs Awapuni. Ashurst is also an area that interests me.

Cheers
Pat

[EdSkin]

Hi Pat

I spent 25 yrs in Palmy. Left in 2008. As a rule I'd say stay out of Highbury it's the Flaxmere of Palmy, although there are higher yields there - and is improving so I'm told. I prefer Roslyn over Awapuni, Roslyn is closer to the CBD. My parents have a couple of rentals in Terrace End and do ok, good long term tenants. Ashurst is a good 15min drive away, with little or nothing to offer in the way amenities - you would be better off looking in Feilding.

[P.Bateman]

Thanks Edskin

[motivated]

Palmy has a new mayor (by election) and he is a go getter. The place already has a fresh buzz about it. Someone commented recentlythat it feels as if ready to go just like Tauranga did 10 or so years ago.
Whilst Feilding is ok in its own right about half of its working population actually commute 20mins to Pn anyway. Ashhurst is closer to PN (and actually part of the city) at only 10mins commute and many military people love it as is safe, affordable and only 15min to Linton down highway 57. An agent recently told me that open homes there typically attract more punters than elsewhere

[Rosco]

Hi Rosco- I know you're a big Hamilton fan but I was wondering whether it is still worthwhile investing in the Tron? What I'm seeing is AKL investors pushing up prices now (especially over the last 6 months) but rents have not gone up to match so now we're seeing falling yields. We are currently looking to buy under $400k, according to RE agents that I talk to there is a lot of demand at under $350K which have moved those prices up. Do you see this investor demand top out at $400K due to lower yields and uncertainty around continued capital gains in Hamilton? Or do you think it will be like Auckland where investors see the capital gains and prepare to accept lower yields?

Marklowes- what are your thoughts on the Roslyn area vs Awapuni. Ashurst is also an area that interests me.

Cheers
Pat

I'm not necessarily a big fan of Hamilton.

[BlueSky]

I'm not necessarily a big fan of Hamilton.

Please elaborate

Hamilton is value for money right now but are the prices inflated by investors only , or is there a genuine increase of population.

What is actually driving this increase and is it sustainable?

[Damap]

The biggest downside to hamilton based on when I lived there is the hideous wet, damp foggy winters. But the population base is so high now I can't see how it couldn't keep growing don't you think Ross?

I have a good mate doing some new builds in Ashhurst and Akoutere. He says anything under 500K is sold before he can build them.

[Rosco]

Sorry having some PT issues.

I'm not necessarily a big fan of Hamilton. I like bigger cities, that have good growth, good employment growth, and more possible buyers or tenants.

I've got no interest in trying to jump around the different markets to pick the next big thing. I'd prefer to find something that is sustainable that gives an investor their desired outcome. In the last boom I saw so many investors move to places like Tokoroa, but then quickly sell up as it wasn't a long term model that they wanted to sustain.

So I like Auckland, Hamilton and Tauranga. They have ports or big infrastucture, or big plans underway.

- Christchurch, I think jumped in value too much, and large risk of rents and prices dropping substantially as builders and contractors move away, and more houses are available through new builds and renovations.

- Wellington - I'm not sure. It is heavily reliant on the government and government spending, which I don't really like.

Ross

[Rosco]

Also look at the population figures I posted earlier in this thread. From 2009 to 2031, increase
-Rotorua 1,700. So is this really a good long term place to invest?
- Palmy 15,500
- Hamilton 47,300
- Tauranga 48,400

It's a shame Auckland figures weren't included as well!

Ross

[motivated]

Palmy has had a bigger economic size /GDP than its population indicates. Big numbers commute daily to PN from some of the not so happy places within an hours drive (eg levin, Wanganui and lots of smaller places)
Something i read earlier this year was that the numbers employed and GDP of PN is actually very similar to that of Dunedin and yet Dunedin has a population of approx 40% greater

[Damap]

Auckland is here:




This is also interesting we are highest percentage growth forecast by miles as well.

[marklowes]

Highbury has certainly improved a ton over the last 10-15 years. Still has some bad areas with pockets of high density state housing (coventry street has a bad name and this is reflected in the GVs in the area, 3 beds for 160k here), but Roslyn has pockets of those areas too. Highbury is a very large suburb and includes some nice streets, average streets can see 3 bed stand alones on full sections going for low 200s and return 300-320 a week rent (I added a internal wall to make a 4th bedroom to get 380 a week in highbury recently), although FHBs are buying in highbury now and its now hard to get a good deal under 250k.

Massey bus service (free for students) runs through Awapuni, and a new cycle bridge across the river from Awapuni to massey is planned. A new inland port is also planned for Longburn just south of Palmy. Thats why I like this side of town at present (at current prices/yields anyway).

So long as rate of population growth is positive, then the city relies on new builds to meet new resident demand, so the replacement cost of housing comes into play. In p.n all new houses are in the 400k-500k plus mark and are generally in outer, even detached suburbs, so you end up with a squeeze going on at the lower priced stock. The kiwi saver withdrawals and FHB grants up to 350k add fuel to this in my opinion.

PN is def not a pure growth play, I wouldnt (and you wouldnt see anyone) 'investing' (=speculating) there at 2-3% yields as we have seen in auckland in the hope of capital gains. But if you can buy at a solid 6% plus yield in palmy, the solid population growth means prices are more likely to go up then down, and when they go up stay up (unlike smaller one trick pony towns, eg gisborne, that have been in decline since 2007).