As more of Auckland’s unitary plan has become operative this year, awareness has grown of the changes in residential land potential, and therefore potential value.
Real estate agencies will frequently list properties for auction which may/may not have a house on site, but will be promoted for their development potential rather than the value of those existing improvements.
Sale based on that potential redeveloped value means there will be a steady supply of sites throughout suburbia gaining consents for intensification – perhaps 4 townhouses where there was once a single house. In some areas aggregation of sites may make sense, such as in or near a shopping centre, to enable development of apartments.
The drawback is that we are a nation of close to zero experience of apartment living until the 1990s, unlike Australia, where the 3-floor walkup (no lift required if you kept development below 4 levels) became commonplace in Sydney, in particular.
New Zealand’s one experiment in suburban intensification was the “sausage block” of brick & tile units – flats, usually only on ground level but sometimes with a second layer.
They differ from central city apartments in that they generally have some parking provision, and their construction isn’t nearly as expensive as multi-level apartment blocks. Remedial requirements may be confined to the affected unit/s, rather than being spread across multiple owners as happens in apartment blocks.
Pricing will dictate that the trend to intensification continues, offering a choice between more travel & having closer neighbours.
In my auction reports over the last couple of years I’ve paid particular attention to apartment sales because they’re as much an investment product as a home. Standalone houses, on the other hand, have been more an owner-occupier product, with investors holding under 30% of stock until the onslaught over the last 5 years by foreign investors looking for assets they can quickly convert cash into. That onslaught (not all foreign, but at prices boosted by foreign investors looking for quick conversion) has helped lift the investor holding in housing stock closer to 40%.
Now, with intensification of land use likely to spread and become more widely accepted as a norm, residential land prices will become more significant.
Intensification will be priced in – as a general rule – thereby also pushing the prices of standalone homes up, although there’s a lull at the moment after heavy overbuying by foreign investors, speculators, and the least powerful investors of all, first-homebuyers.
At Bayleys’ residential auctions around Auckland last week, 3 properties were sold for their land potential, including one a couple of sections back from the water at Whitianga.
8 Scotia Place, unit 7F:
Features: one-bedroom apartment, parking space; remedial issues, start date set
Outcome: auction postponed
Agents: Marcus Fava
2 Navarre Rd:
Features: 802m² corner site, zoned residential mixed housing urban, existing house a 3-bedroom 1950s bungalow
Outcome: sold for $1.566 million at $1953/m²
Agents: Dean Markle & Jill Murphy
19 Ferndale Rd:
Features: 2 bedrooms, double garage
Outcome: sold for $708,000
Agents: Richard Griffin & Pheon Hung
27 St Stephens Avenue, unit 3:
Features: 1057m² section, 138m² 3-bedroom townhouse, 2 bathrooms, deck, courtyard, double internal-access garage
Outgoings: rates $3100/year including gst
Outcome: sold for $1 million
Agent: Fleur Denning
Te Atatu Peninsula
5 Peachgrove Rd:
Features: 809m² flat site, zoned terrace housing & apartment, 3-bedroom house
Outcome: sold for $1.115 million at $1378/m² land
Agents: Tina Tang & Ryan Steven
South of the Bombays
4 Marlin St:
Features: vacant 579m² section near beach
Outcome: sold for $420,000 at $725/m²
Agents: Bev Calder & Sheree Henderson
Attribution: Agency release, my comments.