Whangarei Market Update - March 2020
Quoting Rob Forlong the CEO of the Whangarei District Council, (Northern Advocate 1 February 2020) “The face of Whangārei is set to change dramatically in the next decade in the wake of the Government's $800 million-plus Northland roading and rail infrastructure spend.”
These recent Government announcements which support commercial activities in Whangarei are increasing the confidence that Whangarei will continue to grow. In addition to the increased Northport activity and cruise ship visits, there is talk of both the Naval Base and the Dry Dock operation relocating to the Northport area. Of course the discussion about the relocation of Auckland’s port operations is ongoing and would have a significant impact on the area.
Whangarei District Council are predicting that the district’s population will reach 120,000 by 2030 – without the Navy or the port relocating and 140,000 if they do. This will result in a population density increase from .35 people per hectare to .51 and will drive a need for an additional 12- 17,000 houses in the next 10 years.
The proposed changes to the District plan include higher density housing permitted in several central suburbs.
Business is being attracted north and local companies are seeing growing demand which is driving employment opportunities. The construction Industry is being kept very busy as is evident from the amount of new homes under construction. At the same time (albeit subject to the impacts of Covid -19) tourism ventures are on the increase. The new Conference centre and Hotel which has been on the plans for some time now has a location identified and secured.
All of this, added to the ongoing drift north of Aucklanders, means that Whangarei is continuing to grow and the rate of growth appears to be increasing. There are currently more buyers than sellers active in the market. Rents continue to climb and the demand for homes shows no sign of slowing down.
So it has been a very busy start to the year. I am seeing more listings, and most are selling fast. Some agencies have reported a 30% reduction in the average number of days to sell.
The now visible new Art museum which is under construction in the town basin is ensuring that properties within walking distance of the CBD have experienced above average growth and any property handy to town, Northtec or the hospital continue to be in demand by both buyers and tenants.
REINZ reported in February that, in the National House Price Index, Northland had the third best performance of all the regions over the past 3 months.
While increased prices have squeezed the yields (while rents catch up) there are good deals to be had particularly where value can be added with renovations, subdivision or extension.
A great example of this is my own most recent purchase. I found a property for a client who declined it so I was happily able to take advantage of the deal myself.
The property has two homes on 1,012sqm and is within walking distance to town and is cashflow positive already. I plan to split the title into two, which will be done at a relatively low cost because there will be no need for additional services to be installed and no (or very low contributions) to council infrastructure costs (typically a further 15K+).
The result is great cashflow, which can continue throughout the subdivision process, I expect to add $100K in equity on this year's values – without even considering the opportunity to extend one or both of the existing homes or any other capital gain that homeowners in Whangarei are enjoying right now.