“Absolute” waterfront property values which dropped in 2008 and 2009 have “stabilised” or are improving again this year, according to latest Bayleys real estate research.Analyst Sarah Davidson said the term “absolute” m
“Absolute” waterfront property values which dropped in 2008 and 2009 have “stabilised” or are improving again this year, according to latest Bayleys real estate research.
Analyst Sarah Davidson said the term “absolute” meant that the properties were “absolutely” facing water, or no more than across the road from a beach reserve.
Ms Davidson said that values of sites away from the beach had fallen more than “absolute” waterfront properties, many of which were tightly held, often passing from one generation of family owners to the next.
Another property researcher, Rodney Dickens, who carried out a survey two years ago said he would be dubious about the results until he looked at the methodology.
At that time he said he identified what he described as an oversupply of more than 400 sections in the Far North. He said he preferred QV’s sales and value measurements to those compiled monthly by the Real Estate Institute.
“I’d be surprised if coastal property hadn’t dropped 10%, Mr Dickens said.
The Bayleys Research figures show that Coromandel Peninsula waterfront property - the most affordable of the three areas surveyed - fell 10%. Property on Waiheke Island fell 14%, while in Rodney District the downward correction was 22%.
Ms Davidson highlighted the “phenomenal growth” in prices over the previous 10 years with the underlying land value in the three markets showing three-fold increases.
Bayleys Research’s Absolute Waterfront Value Index tracks value movements for the past 28 years in the three popular coastal destinations.
The index tracks the underlying land value (net of improvements) of property closest to the waterfront with uninterrupted access to the beach. Data is drawn from sales and valuation information.
Ms Davidson said that over the past year, values in Rodney and Waiheke had recovered lost ground, while values had “stabilised” on the Coromandel Peninsula.
She noted the “marked oversupply” of coastal subdivisions which, in combination with reduced demand, resulted in a substantial reduction in prices, and mortgagee sales.
The Bayleys research concludes that absolute waterfront property had enjoyed annual average capital growth of 13.6% on Waiheke Island, 15.7% on the Coromandel and 17.3% per annum in Rodney District.
“When accounting for inflation, real compound returns on absolute waterfront investments have been between 9.2% and 12.9% per annum, which puts them ahead of returns from many other investments even before taking into account the lifestyle benefits,” Ms Davidson said.
