Construction seen as one of the main reasons for economic growth
The real estate in Manawatu seems to be booming, particularly in Feilding and Palmerston North – reflecting extremely tight supply and demand.
According to Landlords.co.nz, Manawatu’s market exceeded the national growth rate of 2.4% with a 3.1% growth in the year ending September 2019. The report pointed to construction as one of the main drivers of the region’s economic growth, with construction investments having increased by 50.2% to the year ending September 2019.
The number of residential building consents increased by 34.3%, while that of new dwellings increased by 35.6%. Commercial investments also picked up, with hundreds of potential jobs bringing new workers in the area.
Andy Stewart, spokesperson for the Real Estate Institute of New Zealand (REINZ), commented that the real estate market in Palmerston North still had a record-setting year even before the new workers arrived.
“Prices have continued to soar, which have been caused by the activity and demand of people who have saved their 20% deposit and are buying their first home,” Stewart explained, as reported by Landlords.co.nz.
“Four years ago, we probably had 500 houses on the market in Palmerston North. Now, we’re surviving with about 140 to 160 houses in total. In Feilding, there’s only about between 20 and 30 properties on the market, and the demand is just snapping them up. I would say boldly, probably 80% of the properties sold in Palmerston North are sold under multiple offers.”
Read more: House prices expected to rise in 2020
Meanwhile, Anthony Reid of Harveys Palmerston North revealed that competition for rental properties remains high. So, it’s wise for investors to expect that they would not be able to grab a bargain.
“In many cases, they won’t sell unless they’ve found something else – because obviously, people can’t rent anything because there’s nothing around, and they can’t buy anything. So that’s a massive ploy for investors – if they’re willing to wait,” he explained.
He added that investment properties should be considered on a street-by-street basis as there aren’t “good” or “bad” areas in Feilding and Palmerston North.
“We have many buyers coming from out of town, and they ask about what area to ignore. Our best area includes pockets where you don’t want to buy, while our worst areas include properties serving as second and third homes for people, value-wise. It’s quite a unique city,” Reid said.
