Property Investor Mag - Growth hotspot Cannons Creek Porirua

[AlFa]

Nice! Good profit indeed

[Don't believe the Hype]

Hi

I live in Wellington and I would definitely not spend my money in Cannons Creek.

Porirua is a great little city, it has some nice areas and no so nice (to put it politely) and the people are friendly.
The Creek has high crime, gangs (Mongrel Mob the main players in Porirua) and beneficiaries. If you are keen to lose money and have tenant drama's it's the place for you.

I would suggest you look at other areas in Porirua if it is the place you want to invest.

Do yourself a favour and take a drive round the neighbourhood instead of sharing old stereotypes. There is hardly a better investment in the wellington region.

> Yields are high
> There is so much opportunity to add value - many properties that you can buy with a rent of $250/wk, spend $30k updating then re tenant at $450/wk
> The government has just committed $1.5b to overhaul the entire Eastern Porirua region
> Price growth has been double digit (as high as 25% yoy) for 3 years with rents going up so fast that yields are still high
> There is ONLY 26 properties for rent in all of Porirua (20,000 dwellings) so you have huge demand for tenants and can be very selective


While you live in Wellington which doesn't qualify you to speak with authority on Cannon Creek, I actually work in the Creek 360+ days a year and have documented on this thread and others the transition of CC from your stereo type to what it is today.

Good luck with your investing

[Don't believe the Hype]

Nice! Good profit indeed

I didn't sell was actually trying to buy. I got blown out for the water with this offer!!

For those that look at CV as a guide, the CV was $500k - this was 81% above CV. The CV was done Sept 16 so is 2 years old but 81% above... wow - I'm seeing many places sell for close to double CV. 470 Warspite Av a stand alone house that had been renovated for sale sold for $575k off a CV of $335, 71% above CV.

[Don't believe the Hype]

Whilst I don't chase capital gains I do greatly appreciate the gift when it comes. Seems we are just about to receive another round courtesy of Porirua city council. In the recent long term plan 2018 they nearly TRIPLED the development contribution.in an attempt to appease the developers the increase was to be phased in over 3 or so years. Last week they wrote to developers for feedback (meaning were doing this but we will pretend to listen to your concerns) that the phase in would be removed becausethe projected growth rate is now higher than planned in the LTP.

They are also implementing a rule that 25% of the fee needs to be paid on granting of the RC not on receipt of the 223/224c.

This will add about 10% to the cost of an average section and will undoubtedly have developers looking to the Hutt and Kapiti for their developments.

Increased costs of new builds, reduction in supply of new builds and a projection (albeit from council) that the population is expected to grow faster than expected can only put upward pressure on prices.

Thanks PCC... Much appreciated

[Don't believe the Hype]

3.5 years on from the original post (apr 16) and the new government valuations are about to be released.

A post from PCC said yesterday that the GV's across Porirua are up 32% since the last GV's (Sept16) - which is a good result for investors... The same post noted Cannons Creek & Waitangirua in Eastern Proirua are up and AVERAGE of 62%. Double the Porirua average.

This is a not unexpected result (and predicted in my posts) given what has happened in the past 3 years... such as the LVR restrictions driving attention to lower priced areas, the lower and lower interest rates were a surprise to me and I'm sure contributed but they will have had no greater impact on Cannons Creek than any other location.

Whilst my rates bill will be up that is part of the business and ultimately these costs are built into the business model.

[Don't believe the Hype]

Porirua is a big place... i'm assuming you're meaning Cannons Creek... the below numbers are for Cannons Creek/Waitangirua/Ranui Heights:

3br houses selling for around $250-$280k renting for around $400/wk - Gross 8.3%
3br units - selling for $170k renting for around $280/wk - Gross 8.3%


At 60% LVR this is VERY VERY positive cashflow

The above from July16

Today:
3br houses selling for around $450-$500k renting for around $550/wk - Gross 5.7% - 6.4% so yields have dropped a bit
3br units - selling for $350k renting for around $500/wk - Gross 7.4% again yields have pulled back a bit

Overall demand for rentals is high availability low so I suspect yields on purchase price will improve over the next 12-18 months.



If you bought a unit 3 yrs ago on 100% finance, on paper your equity would have gone from ZERO to $180k and your yield on PP to $15.3%

[Don't believe the Hype]

Total Porirua growth over the decade at 62% - Cannons creek would be close to double that. The Porirua data takes in such a large area and vastly contrasting markets that the real hotspots are lost in the macro level data.

In New Zealand’s capital, it was Porirua City that led the charge with a 62% increase in average asking prices. Rising from $435,108 in January 2010 to $706,601 in December 2019 – Porirua City saw its average asking price increase more than any other district in Wellington.

https://www.landlords.co.nz/article/976516196/a-decade-of-property-price-growth

[OnTheMove]

If I had to live in Welli, I would definitely live in Titahi or Mana. Love it. Stuff the stigma, they are nice and much less wind than Welli. Although I do like Makara.

The real issue for Welli is it has not had Aucklands minor correction and plateau ripple yet and if there was a major economic crisis it will be pockets of heavily inflated house prices that get taken down fastest with fewer jobs and much less high income jobs than Auckland. Of course Welli is much better placed than some of the CRAZY prices going on in Dunedin.

Well done C Creek though. Good scouting.

Aucks push back was based on affordability, given its not much more than Welli I can see the ripple eventually making its way down the country, its just taken longer than expected. I mean Kelburn or Remuera, please, haha.;-p

Its more these pockets I see taking a hit than properties closer to median. But crystal ball gazing.

[Beano]

Only time I've been there recently was to retrieve my stolen car.. . as I was there the criminals came back to hassle me. Patched mongrel mob wondering around. Was on some side street off champion. Police moved them on that's it, told me someone should give them a hiding! (under age to arrest i think, still twice my size).

I've spent 6+ years looking at cheap areas in welly region to get a decent yield (naenae, bad side stokes valley, East porirua) and everytime ended up buying another back in Palmy instead. In palmy i was able to get the yields without having to deal with the mongrel mob. Lower Hutt city population growth is fairly poor also. Wellington city is good, Palmy is good. Porirua I am not sure?

Agree Titahi Bay is nice and I just missed out on an asbestos roofed/clad place there which is probably worth a lot more now but would become hard to sell again once the current buying frenzy ends.

From 2016 to 2020 did you buy in PN?

[Don't believe the Hype]

one side of 2x3br unit in the heart of Cannons Creek sold recently for $380k - this is not a typo. The vendor bought the unit for $180k and four months later sold the renovated property on a cross lease for $380k.

http://www.professionals.co.nz/prope...cannons-creek/

Dec 17 3br unit selling for $380k... Mar20 same unit sold for $480k up 26% in 2.5 yrs... strong growth off what I thought was a high price.

[Don't believe the Hype]

more growth out of stigmatized Porirua

https://www.stuff.co.nz/national/122831788/milliondollar-baby-porirua-races-towards-1m-median-house-price-mark

There has been a series of sales of 2x3 ex state unit selling for record prices... the last 3 - 4 over $700k ... the highest i've heard close to $800k... the sales data not yet in to back this up though but if that were true the growth between 2010 and 2010 would be $250k to $800k 3.2x in 10 yrs...

You would be hard pressed to find better growth over the past decade anywhere in NZ.

[Don't believe the Hype]

2016 Property investor Mag called out Cannons Creek as an investor hotspot... 4 yrs later and it's no. 2 in the Wellington region.

https://www.stuff.co.nz/life-style/homed/123086633/wellington-house-buyers-target-former-lowcost-areas-as-property-market-soars

[Don't believe the Hype]

2016 numbers for CC:

I can tell you the area has delivered for years:
Gross Yield at Purchase price: >10%
Rent growth ~ 40% or more in the past 5 years
Vacancy - near zero vacancy
Capital growth - also near ZERO up until 12-18 months ago... houses bought for $180k 18 months ago now selling for $250k (min) more like $280k

People always ask me what I think will happen to prices... I always tell them I don't know anymore than the next person... but looking back at the same metrics in Oct 2020 vs. 2016

Gross Yield at Purchase price: 7%+ (so down a bit on 2016
Rent growth: approx doubled from Oct16
Vacancy - near Zero (fewer rentals advertised now that 2016)
Capital Growth - more than doubled you would struggle to find a 3br house to buy for $500k - at best a full reno project at that level.


If you think the numbers worked in 2016 on the yields and demand etc then things seem to be tracking in a similar way. No mention of interest rates in 2016 but the 5 yr rates were around 5%, they're currently sitting at 3% so based on these metrics alone now is as good a time as any to buy.

As to where prices will be in 12 months and beyond - over to the crystal ball gazers.

[Don't believe the Hype]

Further proof there is no such thing as 'yield' locations and 'capital growth' locations...


'Over the last 21 years (Jan 2000 – Dec 2020), Cannons Creek had the fastest growing house prices in all of Wellington, at 9.66% per year. That is 34.43% faster than the median Wellington house price.'

???? Wellington Property Market | Average Suburb House Prices… | Opes (opespartners.co.nz)