Peter Thompson: First KiwiBuild homes heading for market

Peter Thompson - Managing Director, Barfoot & Thompson
Peter Thompson: First KiwiBuild homes heading for market

The first KiwiBuild homes in the country are likely to hit the Auckland market before the start of summer.

A great deal of speculation has swirled around what KiwiBuild homes will do for the market, particularly in terms of their impact on prices.

Those anticipating they will be the silver bullet leading to a wholesale reduction in prices will be disappointed.

SEE ALSO: Peter Thompson: Positive signs for residential house sales    

Prices in Auckland have been moving in a tight, stable band for the best part of a year, sometimes up slightly on a monthly basis and sometimes down, and this trading pattern is likely to remain until the usual spring uplift occurs.

The single most significant signal in house activity for me is the comparison between sales numbers in the May-July quarter compared to the same months in 2017.

In that 12 week period sales numbers increased by 2.1 percent while the average price at $926,000 stayed constant.*

In short, sales numbers up, prices stable.

The main impact I anticipate from the first release of the KiwiBuild homes is to revive interest among first-time buyers and those on modest incomes.

There is a perception around that it is ‘impossible’ to purchase a property in Auckland under $500,000.

Those that fall within the KiwiBuild market segment will undoubtedly take a keen interest in the price, size, location and terms and conditions around the sale of these first properties. And given the size of this segment, and the small number of homes available, the majority will not be fortunate enough to be successful in the tender process.

Hopefully, it will cause this segment of the market to yet again look at what is available in the wider market and come to the conclusion they are not shut out.

For example, they’ll be interested to learn that in June, 18% of the properties we sold had a sales price of under $500,000.*

The rapid increase in the supply of apartments and terraced homes reaching the market is making choice for people in this market segment far greater than it was a few years ago. There were even stand-alone, three-bedroom properties among the properties sold.

As momentum around KiwiBuild increases, the scheme may also be a valuable tool to help relieve another of Auckland’s pressing housing challenges.

In the past decade Auckland has rapidly grown from a big city into being on the fringe of a major world city with a 24/7 lifestyle.

Throughout the world cities of this size struggle with the challenge of providing accommodation to those that enable the city to function efficiently - those that provide the vital services that make the city liveable for the majority.

They include such service providers as public transport employees, nurses and para medical staff, firefighters, police, pre and post school personnel, teachers, cleaners, and shop and restaurant staff.

These people undertake shift work, start and/or finish work at hours outside what are the norm for most.

To be able to provide the service they do, they need housing convenient to their work place.

One way London sought to tackle this issue was for apartments in designated developments being reserved for those engaged in specified occupations, and if on-sold could only be purchased by people in the designated occupations.

KiwiBuild could be one answer to alleviating the challenges these service providers face.

KiwiBuild is not without its detractors. Rather than look to be critical of KiwiBuild, I believe we need to give it a chance to work. And if there are issues, let’s work towards improving the blemishes rather than panning the whole concept.

Within KiwiBuild are the seeds of potential answers that can make all our major cities even better places to live and work well into the future.  

Peter Thompson

Managing Director, Barfoot & Thompson

barfoot & Thomspon

 
SEE ALSO: Peter Thompson: Positive signs for residential house sales 

 

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