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  1. #1

    Default Rural/lifestyle property values - up or down?

    Firstly, my apologies if I am posting this on the wrong forum here. I'm a newbie.

    I'd like to read your opinions and observations about rural/lifestlye property values in New Zealand. I'm particularly interested in what's happening to the value of 2-20 hectare properties that are little more than chunks of scrub, bush and grass, still designated as "rural" and with no sewage, electricity or piped water supplies.

    It seems that most of the discussions on this forum are centred on urban properties, and most people seem to feel that values will at least plateau over the next couple of years or possibly decline. How do you think this will affect rural property prices? I know the dairying boom has pushed land farm prices up and that this has had a knock-on effect with smaller rural properties, but do you think the lifesyle property market may be in decline?

    I'm guessing that kiwis who own second properties in the countryside might be more inclined to sell these days due to both mortgage repayment pressures with their first homes, increassing job insecurity and the rising cost of petrol that will make driving out to their bach much less appealing. Also, the global economic downturn and the skyrocketing costs of airline tickets will have a pretty big impact on tourism, so that might also see rural properties losing value.

    The big factor that might see NZ rural property values remain stable or even rise is the growing international interest in owning a rural hide-away in remote New Zealand. Have you seen or read much about this?

    This is all just semi-informed speculation here from someone who is totally new to this forum and would really like to hear what you all have to say.

  2. #2
    Join Date
    Feb 2004
    Location
    Newcastle-under-Lyme
    Posts
    3,066

    Default

    Hi Jiburo

    Perfect place to post this. My (entirely uninformed) feeling would be that rural land of the sort you are describing is likely to follow residential land downwards because the people who purchase it are really residential landowners looking for that back to nature kick not farmers or commercial users of the land. I wouldn't rely on international demand to hold the prices steady because many countries are having their own falling markets meaning that they are feeling poorer as well...

    But that is really just a guess it isn't a market I follow.

    Cheers
    David

    PS Welcome to the forums

  3. #3
    Join Date
    Feb 2004
    Location
    North Waikato
    Posts
    651

    Default

    Lifestyle blocks seem to have been hit by the downturn south of Papakura. Few buyers and need to discount deeply to get a sale.

    One agent told us that a property that would have sold for over $1m was now around $800K. I have no idea what the actual sales figures are saying and whether this is correct.

    John

  4. #4
    Join Date
    Apr 2008
    Posts
    2,086

    Default

    I'm familiar with Rodney County (north of Auckland) where there are numerous lifestyle properties. The number of bare blocks increases the further north you go. There are hardly any in the areas close to Auckland (eg, Coatesville, Dairy Flat, Silverdale, Redvale.) Monid is correct re prices. They follow the Auckland market. I checked the sales about 6 weeks ago and blocks with houses were going for about 10% more than the 2007 Government Valuation and are trending downwards. But there are no bargains yet, because, just like Auckland, prices surged between 2001 and 2006.

    Electricity reticulation in the region is reasonable good. As for water and sewerage, that's all 'do it yourself', and the systems work quite well.

    Many of the farming blocks in the area, particularly those further to the south, are uneconomic, given their size. (The District Plan permits subdivision in rural zones if native bush or wetlands are legally protected, so owners have tended to subdivide.) The state of the diary and meat prices do not affect values for small blocks. The main driver is the Auckland residential market, although fuel costs could definitely come into the equation.

  5. #5
    Join Date
    Dec 2006
    Posts
    1,656

    Default

    Agree with Greenfish. I looked at some lifestyle blocks in Jan after arriving from UK. Decent places in Coatesville & Dairy Flat were $1.2M and up. Overpriced in my opinion, and still so. The prices seem to have come down a fraction, but no one's hurting too much yet otherwise I think you'd see bigger price drops.

  6. #6
    Join Date
    Jan 2008
    Location
    North Shore, Auckland
    Posts
    1,079

    Default IMO all you need to do is

    Wait till the petrol price reaches $3 a litre. You may not need to wait for very long.

  7. #7
    Join Date
    Dec 2006
    Posts
    1,656

    Default

    hehe - yeah. Imagine the frustration for Bollard - sees prices rising like that - having a massive affect on inflation, yet the price rises have nothing to do with the local market. He then puts interest rates up to fight something he has no control over, badly affecting mortgage holders, and people holding foreign currency.

  8. #8
    Join Date
    Dec 2006
    Posts
    1,656

    Default

    Also, have you noticed the hints published by some RE agents? "Interest rates are dropping - recent immigrants people will be cashing in and buying up large". They seem convinced interest rates are about to fall. I hope they do, but the pundits are no longer quite so sure, with Cullen's budget spendup.

  9. #9

    Default

    Hi again.

    Thanks very much to David, John, Green Fish, K1w1 and 97910241 for your replies. I too imagine that many lifestyle property owners in New Zealand are suburbanites with mortgages to pay, so you're probably right in guessing that lifestyle property prices might follow the suburban trend downwards. Also the Brits and Americans, who I believe form the majority of foreign lifestyle property buyers in New Zealand, are also being buggered by their own bad property markets as you mentioned. On top of that the US still has a lot of very cheap land compared to New Zealand, and it's easier for the Americans to buy at home than here.

    I'm considering the option of working with some other people to buy a bigger block (say 25 hectares) then have it legally subdivided. We'd all be planning on having our own electricity supplies, sewage systems (composting toilets etc) and water supplies, and even the access road could be pretty basic. Green Fish mentioned that local authorities will allow subdivision if bush and wetlands are protected (usually with QE2 Covenants I understand), and I am sure they might be even more obliging if you point out that the whole project would be very eco-friendly and self-sufficient. I read somewhere that the minimum size of a rural section after subdivision is 5ha. Is that true across the country?

    I think the main influence on lifestyle property values of the next few years will be the cost of fuel and oil. In the short-term it's going to make rural living much less attractive to the conventional drive-to-the-office/drive-out-to-the-ponies lifetylers, but I think demand for rural properties is going to increase in the long-term.
    Last edited by jiburo; 27-05-2008 at 02:45 AM.

  10. #10

    Default

    We bought a hectare of land In Tauranga last year and I am not sure if its value has dropped. Most likely, but we got it cheap from a family member and it is inside the city limits and has all utilities. We have much pretty much deciced to sit on it for a few years and wait before building our dream home. Clearly doesnt make financial sense totally, but a private flat hectare inside city limits was to good to say no to for our 'personal sides', even if our 'invester sides' gave us an uppercut.

    One point I would make is that even a hactare of land is hard work, we are lucky that my father is running some cattle on it for us (cheap meat), but if you new to farming(even small scale) then you will be shocked at the hard work required to keep things ticking over.


 

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