Interest in sections up

  MEDIA RELEASE

Interest in sections up, helped by shortage of houses for sale

18 August 2009:  There has been a notable increase in interest in residential sections in recent months, in part because of the shortage of houses for sale, according to Harcourts New Zealand CEO Bryan Thomson.

According to anecdotal feedback from around Harcourts, which is New Zealand’s largest real estate group, Mr Thomson says the level of interest in section sales has definitely risen recently, following months’ of little or no enquiry.

The increase in interest is also translating into a lift in the number of section sales, he says.

“From all sorts of locations - major metropolitan centres through to smaller regional towns - we’ve had reports that there’s a renewed level of interest in sections and also an increase in the volume of sales, after what has been a very quiet period for this segment of the property market.

“In part this is because the volume of house sales has increased in recent months but there hasn’t been an abundance of new listings coming to the market, so for the large number of serious buyers there is actually a shortage of houses for sale and they are therefore having to consider buying a section and building instead.

“When coupled with the fact that the asking price for sections has come back, by up to 30% in some cases, and that the cost of building materials and labour have eased as suppliers and tradespeople ‘sharpen their pencils’ this option has actually become a pretty attractive proposition.”

Mr Thomson says a range of Harcourts’ franchise owners are reporting this trend.

Simon Martin from Harcourts’ franchise Advantage Realty Ltd, which operates multiple offices in the Bay of Plenty, says the level of enquiry about sections has definitely picked up over recent months, particularly for sections that have had price reductions.

“The volume of section sales has increased too, however we are not back up to the levels experienced in the heydays of 2007.”  

According to Pete Meaclem, the Manager of Urban Projects for 17 Harcourts offices in the Lower North Island, there has been a surge in section sales in his area too.

“Our group has negotiated the sale of more than 20 sections within the past three months, which equates to more section sales activity than we’ve had in the previous 15 months, with recent sales ranging from the mid-$100,000 to mid-$300,000.
“Lifestyle sections in the Nikau Views subdivision on the Kapiti Coast for example have all but sold out and there’s also been an increase in activity amongst the premium residential sections on the coast which command position or views.”

Mr Meaclem says he expects section sales growth will be brisk moving toward 2010, with the traditional spring pick-up in the market coupled with the prospect of an economic recovery.

In both Marlborough and Nelson Harcourts business owners say there has been an increase in interest, with Harcourts Nelson‘s Amanda James reporting one section in the city was recently sold in just one week – “which has been unheard of for quite some time”. 

From further round the coast, in Golden Bay, Harcourts Sales Consultant Nikki Ryan reports that more sections have sold in the area in recent months than they had in years, due to a combination of vendor motivation and low interest rates.

“In particular there has been a lot of activity in the lower end of the market, and at least half of the buyers have said while they couldn’t afford to build for a few years they wanted to buy the land while prices were good and interest rates low.”  

In both Christchurch and the wider Canterbury/Westland area section sales have also increased according to Peter Greene, the managing director of Harcourts nine-office franchise Grenadier Real Estate Ltd.

“Last year throughout Canterbury and Westland, irrespective of price, sections sales each month were slow and building consents were at low levels.  Now, land prices are coming back and people are therefore seeing more value in sections and looking at the building option, so the level of interest and volume of sales has lifted from what had been single figures each month to considerably more than that.”

Greg Roberts, the General Manager of Harcourts-Twiss Keir, which is focused on Christchurch’s Northern suburbs along with North Canterbury, says good marketing campaigns and “aggressive” price reductions of 25% - 35% to meet the market are helping drive the lift in section sales.  

 ENDS

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