A couple of interesting property developments for you.
1. Half finished town houses in Christchurch.
2. Lack of demand for off the plan deals from developers.
That last one came from a select committee hearing last week. The head of Kiwibank was suggesting there is a stark lack of appetite for off the plan stuff because of the risk you take on what the value will be when its done i.e are you underwater?
And also the risk you take that the thing will never be finished.
Which dovetails into the first observation which comes out of Christchurch, a city in which you would quite rightly ask; how is it possible things aren't booming in that part of the world?
As always, the answer is in the detail.
The Christchurch problem is around small townhouse-type builds close to the city, often with no garage. In other words, building for a world view that isn't that of the average New Zealander.
Once again we are supposed to be like Amsterdam or New York. Except we aren't and will never be.
Cars are important.
You have seen it in Auckland as well with apartments with no parks. 'It's so cool, we're all on e-bikes".
Except we aren't, so the cars are stacked on the streets outside, blocking trucks and generally proving theory isn't reality.
Plans? Who would take the risk?
Tell me what the market is going to be in two years - no one can! That's a real problem and does remind us a consent is not a house.
But the key is our need and desire for housing hasn’t really changed. Cheap builds will never thrive and builds with no garages will never have a demand.
Rightly or wrongly the dream that has never really faded is a house. A detached house, maybe with a bit of lawn and most certainly a place for a car.
The stats show it. First home buyers are in the market right now and standalone homes are what they want. They will borrow and bleed to do it.
What the trendies want and what the real world is prepared to pay for it are, to some degree, at odds.
And that is why the areas of the market that have trouble, have trouble, because theory and ideology doesn’t have a deposit.
The buyer does.
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