Palmerston North

[Marjie]

Thinking of investing in Palmerston North. Only have $250k but some quick research online shows I could find a 3 brm home for that. Just after some general advice about the region - do you think it has growth potential, know of any good agents or other contacts who could offer advice etc.
THanks.

[Tomo]

have a read of tony alexanders latest weekly overview. It has some commentary around regional population growth. Growth forecast for the region is somewhat muted.

http://tonyalexander.co.nz/regular-publications/weekly-overview-18-august-2016/#more-2678

[flyernzl]

I had a bit of a wander around NZ two years ago, looking for out-of-Auckland areas that seemed to have potential for investment.

The Palmerston North/Feilding area was one that I thought would be OK - largely because of the demand from Massey University staff/students.

[marklowes]

have a read of tony alexanders latest weekly overview. It has some commentary around regional population growth. Growth forecast for the region is somewhat muted.

http://tonyalexander.co.nz/regular-p...016/#more-2678

Palmerston North has a 18.3% mid estimate population growth to 2043.

Compared to -2% in Lower Hutt and -4.7% in Rotorua, -7% wanganui.

Only single digit growth in Napier and Hastings.

Even popular nelson has a lower projected growth of 14%.

18.3% mid estimate (based on way too low assumption of 12k net immigration cf 69k current) is similar to Wellington city and Christchurch which have 22% projected growth.

Yup auck ham and tauranga are projected to grow around 40% but good luck buying a 3 bed stand alone in any of these cities for under 300k, or finding anything positively geared.

Considering the prices are still around 300k in palmy I think it's head and shoulders above any other region that has yet to seriously boom.

Not just Massey, although the international student boom in pushing up rents, and tertiary cities are good defensive plays during recessions. It's the mid central health base which means patients from as far away as new plymouth, HB, wanganui end up in pn hospital for cancer treatment etc. Too many other things to list, it's a great diversified city that's about to get a lot closer to welly after transmission gully is complete. Prices are rising at a steady pace but it's managed to fly under the radar for a long time even with record beating months with 19 days to sell in May (fastest of all NZ cities) and low 20's in June, July.

Inventory of less than 4 weeks (papers always incorrectly quote wellington as having the least inventory in the country with around 5 weeks).

PN right now has 111 listings on trademe and last month 140 were sold. We are now seeing for the first time in a very long time auctions in PN as a result of this chronic shortage of listings.

[marklowes]

Thinking of investing in Palmerston North. Only have $250k but some quick research online shows I could find a 3 brm home for that. Just after some general advice about the region - do you think it has growth potential, know of any good agents or other contacts who could offer advice etc.
THanks.

I've missed out by 20k or so recently trying to buy a 3 bed stand a lone in mid 200s in Palmy. If you can secure a stand a lone 3 bed (4 bed better as rent for 380-400 plus a week anywhere in the city) under 300k then you will do well in my opinion.

The first home buyers with kiwisaver can buy up to 400k now (price cap raised a couple of weeks ago from 350k) with only 10% deposit, and free 10k grants under the welcome home loan scheme.

With 111 listings and population of 85k (over 110k when Feilding population is included, whose residents often commute to pn for work) means we are now seeing auctions in Palmy. My gut feeling is spring/summer will see FHB's going to their banks, loading up with pre-approvals up to 400k, and pumping up everything under 400k. They are emotional buyers, they like fine weather, they listen to BBQ chat about prices rising (price rising rumours haven't even reached the local cabby's yet!). Once these guys get excited I believe we will see palmy follow Hamilton with 30% price rises. Time will tell. But I'm still a buyer for specific property types there (if I can ever find them)

[Eugene]

Mark which areas do you like in Palmy?
Thanks

[learningInProgress]

I've missed out by 20k or so recently trying to buy a 3 bed stand a lone in mid 200s in Palmy. If you can secure a stand a lone 3 bed (4 bed better as rent for 380-400 plus a week anywhere in the city) under 300k then you will do well in my opinion.

The first home buyers with kiwisaver can buy up to 400k now (price cap raised a couple of weeks ago from 350k) with only 10% deposit, and free 10k grants under the welcome home loan scheme.

With 111 listings and population of 85k (over 110k when Feilding population is included, whose residents often commute to pn for work) means we are now seeing auctions in Palmy. My gut feeling is spring/summer will see FHB's going to their banks, loading up with pre-approvals up to 400k, and pumping up everything under 400k. They are emotional buyers, they like fine weather, they listen to BBQ chat about prices rising (price rising rumours haven't even reached the local cabby's yet!). Once these guys get excited I believe we will see palmy follow Hamilton with 30% price rises. Time will tell. But I'm still a buyer for specific property types there (if I can ever find them)

Don't you need to live in the purchased property in order to use the kiwisaver and the 10K grants? Do I miss anything here?

[Nick G]

Yes you do, 6 months I think it is. It's quite hard to get access to.

[marklowes]

Don't you need to live in the purchased property in order to use the kiwisaver and the 10K grants? Do I miss anything here?

Fhb's = first home buyers who have been dormant in Palmy (Like welly) for last 8 years. They will be the ones that drive prices higher.

This means for an investor buying, good growth prospects exist, which answers the original question.

[johnnyandtina]

I still believe the property market is Palmy is way less insane compare with other cities.
I've been watching its market for 14 years, the capital value grow steady but slow. I wouldn't expect it will becoming overheated like Waikato by next decade, because there are less land developers than other regions.

[marklowes]

July figures in latest property investor magazine has Palmy days to sell again topping all other cities (or all other reported areas with over 100 sales in July)

July: 19 days to sell. 140 sold.

Still flying under radar, suspect a few local real estate agents are snapping up a few for themselves.

[marklowes]

Some recent news articles relating to growth of PN as the lower north island distributing hub.

New nz post 737 freight plane and significant bridge and roading investment in pipeline.

http://www.stuff.co.nz/manawatu-standard/news/83941417/New-road-bridge-for-Palmerston-North-in-less-than-a-decade

http://www.stuff.co.nz/business/82682345/Freightways-opens-new-Palmerston-North-courier-depot

.

[johnnyandtina]

I would hope to see a lot more potential in Manawatu are in next 7 years.
for instance, population hikes 10% in general and average property market goes up solid year by year.

[marklowes]

Retail development happening at Palmy airport. Big increases in passenger numbers. All looking good for that sort of growth.

http://www.stuff.co.nz/manawatu-standard/news/84446893/Airport-plans-business-park-at-city-entrance

[marklowes]

http://www.stuff.co.nz/manawatu-standard/news/85520149/Manawatu-Whanganui-one-of-the-best-regions-for-young-home-buyers

Local buyers in Palmy starting to cotton on.

Why the lady in the story didn't use welcome home loan at 10% deposit for properties up to 400k is a mystery. Doubt she earns over 80k to rule her out on a income basis.