A surge in sales activity across the Coromandel has driven values upward as market conditions have tightened.
Having fallen sharply following the Global Financial Crisis (GFC) the recent spike in values has seen the area’s median challenging the peak levels witnessed in early 2008.
Activity has been driven predominantly by a sharp increase in Auckland based buyers motivated by a combination of factors. In late 2015 a raft of new regulations, aimed at cooling investor activity within the Auckland region, has resulted in increased activity in other centres, particularly those neighbouring Auckland itself. Auckland home owners are also benefiting from high levels of equity some of which is being channelled into the purchase of holiday homes. On the other hand the high cost of Auckland housing is acting as a disincentive to those who are not homeowners and this has led to increasing numbers looking at the lifestyle advantages which other areas can offer them. In addition to Auckland buyers the Coromandel remains popular with overseas purchasers
The lift in sales activity is well illustrated in the graph above which shows the change in sales volumes recorded within the peninsula’s seven largest markets in 2015 v 2014. Between them they account for approximately 85% of the 1,050 transactions completed in the area in 2015, the 2014 total was 707.
The lift in sales activity has seen stock available to the market shrinking as the number of new listings being introduced has failed to keep pace. Analysis by Realestate.co.nz shows that if no new listings were taken and the current rate of sales continued then the total inventory would sell in just 29 weeks. As recently as December 2014 this figure stood at 111 weeks while in September of 2014 the figure peaked at 182 weeks.
Median values for the peninsula peaked pre GFC at $440,000 in the march quarter of 2008. The recession had a significant impact on values with the median falling to $327,000 in late 2011. Values fluctuated within a narrow band from then until mid 2015, At that stage the median stood at $370,000, by the end of the March 2016 quarter this had increased by just over 16% to $430,000.
Spotlight on Thames
Thames is the largest of the Coromandel residential markets. In 2015, 252 sales were recorded within the township. When Thames Coast sales are added the total climbs to nearly 300. The area attracts the highest volume of sales due to the fact that it is the largest service centre on the Coromandel offering a wide range of retail amenity and excellent health care facilities based around the town’s hospital.
The health, retail, engineering and automotive industries based within the township and the nearby Kopu industrial precinct provide the area with a strong employment base.
Trends within the Thames and Thames Coast residential markets have largely mirrored those of the wider Coromandel market. The pre GFC peak in values was reached in mid 2007 when the median sales value stood at $366,000. As the economy weakened the median gave up approximately $100,000 falling to $266,250 in the third quarter of 2011. Values began a sustained recovery from early 2014 although it was not until the opening quarter of 2016 that the median eclipsed the pre GFC peak, ending the quarter at $381,250.
The increase in values highlighted above has changed the make up of the market in terms of price banding. As the charts below show, in the first half of 2014, just as values started to trend up strongly, 45% of sales were concluded at values below $300,000. In the six months ending March 2016 this segment of the market accounted for just 20% of sales.
The $300,000 to $400,000 band remained the single largest sector, however, sales of between $400,000 and half a million had increased from 14% of the market to 25%.
The Coromandel economy has performed strongly over the last two years. GDP growth in 2015 was 3.2% according to statistics published by Infometrics. While slightly below the national average the improvement from 2013 when growth was just 0.6% is significant.
The economy is well diversified with Agriculture forestry and fishing, rental hiring and real estate and manufacturing all having a greater than 10% share of the regional GDP.
Employment growth has also accelerated recently posting 2% growth in 2015 taking the total number of filled jobs in the region to 11,650. The retail trade is the area’s largest employer followed by the construction and health sectors.
Retail Sentiment ImprovingPollen Street is Thames’ main retail thoroughfare and provides a wide range of retail amenity. Locally owned businesses dominate the local market, however the local offering is augmented by national brands particularly within the prime strip located between Sealey and Mary Streets
High street retail has performed well over the last couple of years bolstered by the strongly performing tourism sector and the influx of new residents from outside the area. The success of the retail mix is well illustrated by the fact that the vacancy rate within the town is just 3% with a majority of the vacant units located at either end of the retail strip.
There is no vacancy within the Sealey Street to Mary Street prime patch and just two units empty between Sealey and Richmond streets, with this including the recently closed Dick Smith Store.
The largest occupier type within the high street is café, takeaways and restaurants followed by health and beauty stores and service providers which includes such things as insurance brokers, holiday shops and accountants.
The weighting towards food outlets and health and beauty operators is becoming a common theme in many high streets, largely due to the fact that they do not have to compete with e retail services to the same extent that clothing outlets, for example do.
Auckland Building Boom Boosts Thames Economy
Not only is Auckland’s rapid expansion having a significant impact on the local housing market there are signs that the local economy is also beginning to benefit.
Bishop Industries has recently taken a lease negotiated by Bayleys, of warehouse space within the ex-Carter Holt Harvey Mill site in Kopu from which they will supply concrete building panels to their projects currently under construction in Auckland.
The company is currently involved in a major Auckland construction project and has been providing concrete panels from its existing fabrication facility based in Palmerston North. The Kopu location provides the company with a manufacturing base which is well connected to Auckland and offers highly competitive total occupancy costs when compared to similar facilities situated within established Auckland industrial precincts.
The company has taken an 8-year lease over 8,000sqft of high stud industrial space plus yard and has begun concrete panel production for the Auckland market. It is anticipated that the company will employ up to 13 people initially; a figure which may grow in the near future.
New Tenancy Lifts Mall Footfall
The recent addition of Lincraft to the tenant mix at Thames’ largest Mall, Goldfields, has paid immediate dividends with visitor numbers rising. Over the opening weekend the numbers were up sharply and while this number has tapered off, numbers continue to sit at above longer term averages.
The expansion of anchor tenants The Warehouse along with Bed Bath and Beyond is further positive news for the Mall which has had high levels of vacancy over recent years.
The mall management advise that it is looking to expand both the general retail and food court mix in the near future. Discussion with a number of food operators is currently underway. In order to attract further retail tenants the mall operators are willing to offer flexible lease terms with gross rentals falling between $250 and $300/m2.
In addition to the uplift in leasing activity the mall is undergoing an upgrade which will include the replacement of floor tiles, repainting of of walls and the replacement of common area lighting.