Property in popular holiday areas performs well

Date: 06 December 2018

 
As thoughts turn to the anticipated end-of-year break, we were curious as to how property has performed in some of NZ’s key holiday areas. Generally speaking, the areas we’ve looked at have been busy in terms of sales, with days to sell reasonably low. On top of that, value growth has also tended to be pretty strong. Holiday-makers who bought in to some of these locations a year ago will have even more reason to enjoy this year’s break.
 
CoreLogic research analyst Kelvin Davidson writes:
 
December is here, just like that: and no doubt the holiday break is top of mind for many. Some people may even be considering a sneaky property investment in one of NZ’s many popular spots. So how have these holiday locations fared over 2018? Across the 10 locations* we’ve analysed (and it’s not an exhaustive list), there are four stand-out observations.
 
First, and this may surprise you, but property in NZ’s popular holiday locations doesn’t necessarily come with a hefty price tag. As the first chart shows, many such locations have property values below the national average, with Whitianga sitting bang on the average. Of course, even if they are starting at “affordable” levels, many of these locations have also become a bit more expensive this year, with only Waiheke Island and Paihia recording flat values in 2018. Coromandel, by contrast, has seen median property values rise by almost 11% (equivalent to a rise of about $46,000).
 
Median property values and annual % change  (Source: CoreLogic)
 
Secondly, as the second chart shows, there’s no out of season lull really: these locations have generally had active property markets throughout 2018, with only Waiheke Island and Wanaka having had a turnover rate (sales as % of dwelling stock) noticeably below the national average. Coromandel again stands out, with a turnover rate of almost 8% in the past 12 months.
 
Third, when a property has come onto the market in these areas over the past year, it has tended to sell pretty quickly. Properties in Tahunanui, for example, have only taken a median of 16 days to sell (see the third chart). Of course, some areas have taken longer: notably Coromandel, Paihia, and Whitianga.
 
Median days to sell, last 12m (Source: CoreLogic)
 
Fourth, gross rental yields tend to be lower in most of these areas, with only Paihia, Tahunanui, and Coromandel notably above the national figure (see the fourth chart). Low gross yields from putting a property into the traditional rental market in Queenstown, for example, make it easy to see why Airbnb (which tends to have higher returns) is having a pretty big impact there.
 
Gross % rental yields (Source: CoreLogic)
 
 
Clearly, the areas we’ve covered here are also residential locations and aren’t just for holidays, with property values and market performance determined by all of the usual year-round supply and demand factors. However, any holiday-makers who were tempted into a property purchase in an area like Tahunanui 12 months ago will have even more reason to enjoy their break a year on.
 
Kelvin Davidson Senior Research Analyst. Mobile 027 355 3813,   Email: kelvin.davidson@corelogic.co.nz
 
Enquiries can also be directed to media@corelogic.co.nz
 
* We’ve used Motueka as a proxy for Kaiteriteri, given its close proximity.
 

Tags: NZ Property Market , Auckland property, NZ realestate


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