New Plymouth
by The Landlord
New Plymouth
New Plymouth is in the Manawatu, right? Or is that Palmerston North?
New Plymouth District Council group manager of strategy Liam Hodgetts has coined confusion about where exactly New Plymouth is – national dyslexia.
It’s a well-worn joke in the corridors of New Plymouth’s council and its economic arm, Venture Taranaki – and it has an undercurrent of uncomfortable truth to it.
It could be argued that the city of 56,000 people that lies below the stunning peaks of Mt Taranaki is perhaps overshadowed by other regions such as Hawke’s Bay, Marlborough and Nelson – yet not for much longer if the economic agencies are to be believed.
Venture Taranaki CEO Stuart Trundle says over the past 10 years, New Plymouth’s canny, visionary civic leadership has been working hard to get New Plymouth on the map – and it’s working.
The lifestyle is looking increasingly attractive in New Plymouth and the wider Taranaki region, particularly to those looking to sell up in Auckland, he says.
As families migrate to New Plymouth, Trundle believes demand will be higher for better quality rentals, driven also by the growth of local families. New Plymouth is an ageing population, yet there is also a bubble in the 0-15 years’ age group.
Drawcard
WOMAD is but one cultural attracting pulling the punters, along with the contemporary art museum Len Lye centre, Puke Ariki (the world’s first integrated museum, library and information centre), the kinectic sculpture Wind Wand, and the Coastal Walkway. Securing major sports events is also a focus; Trundle says the International Triathlon Event as just been secured.
But while there is no doubt New Plymouth is evolving into a city with more diverse cultural and sporting attractions, it is still very much relies on dairy, oil and gas for its economic success.
Setbacks
After experiencing growth of about 5.3% between 2006 and 2013, 2016 has been painfully quiet for Taranaki.
Setbacks in the oil and gas sector, which contribute 40% of the region’s GDP (according to BERL) and a slump in dairy prices has impacted on the property market (albeit the dairy prices have experienced a rise and seem to be back on track now, according to ASB).
Projects have been deferred or shelved in the past year and jobs have been lost.
In February this year, Todd Energy and its partners abandoned their wellsite in coastal Taranaki, effectively ending exploratory drilling in the region – and New Zealand.
Taranaki Property Investors’ Association president Colin Comber says contractors to the oil industry packed up and left executive, higher-end rentals in the $700-$750 per week range, forcing investors to pull back the rents to around $500 per week.
However, in the mid-market, investors aren’t working hard to find tenants, and demand for properties is steady, he says.
Mid-range demand
Comber’s thoughts are echoed by local real estate agent Robert Angus, who says there is a huge groundswell of buyers in the $300,000 to $400,000 bracket. The listings are hard to secure, he says.
New Plymouth-based QV valuer Danny Grace says the hot part of the market is properties under $400,000, driven by the Government subsidies available to first home buyers under this range. Investors have to compete with first home buyers, he says.
He believes the biggest change to the property market is the reduction in the number of properties on the market for sale. Listing numbers are considered to be very low, and this has created pressure on the existing stock as investors and homebuyers fight over pickings.
Comber says there is a quite a lot of movement of baby boomers who want a newer, fresher environment, and upgrading to new townhouses and executive homes means “accidental landlords” are being created.
The New Plymouth urban area is fairly homogenous in terms of the quality and type of housing. Comber says.
Angus says investors are attracted to the areas close to the CBD, including Vogeltown, Brooklands, Pucker Park and houses near the walkway and foreshore. Harcourts real estate agent John Christensen says, however, some of the inner city suburbs are not viable for investment as they are too expensive, with high maintenance bills.
Some “good parts” of Spotwood would make sound investments, he says.
QV statistics show a block of six two-bedroom units in 22a Mill road in Vogeltown sold for $721,000 in April 2016. The property is being rented for $1140 per week, with a yield of 8.2%.
In comparison, a block of two, two-bedroom units in Aratapu Street in Waitara, 15 kms northeast of New Plymouth, sold for $251,000 in June this year. It has a market rental of $450 per week, with a yield of 9.3%.
Affordable options
Lynette Waiwiri is based in New Plymouth. She and her husband own seven properties in the city including two in the central area and five in the western suburb of Spotswood.
They invested in most of the properties in 2007, when property was cheaper, and the property gains have been slow, but steady.
“With the bigger cities getting hammered, I think I would invest in New Plymouth – it’s only a matter of time before New Plymouth is on the map,” Waiwiri says. “Our airport is going to get bigger, infrastructure is on the move, and there are still a lot of quarter acre sections.”
In Spotwood they get a yield of 10.8% for a three-bedroom and one-bedroom property in Paritutu Road, 14.3% each on two three-bedroom units in Tumai St, and 9.75% from a three-bedroom house in Herekawe Drive.
QV national spokesperson Andrea Rush says New Plymouth house prices jumped 8.3% to $389,690 in the July year.
“New Plymouth has shown steady and moderate growth in the past few years but values there are not showing the same rapid jump in growth that we have seen in some other central North Island centres such as Hamilton, Tauranga, Rotorua and Whangarei,” she says.
Comber says as an investor he would rather have steady capital growth of 6%-9% per annum and rents moving upwards at 3.4% per annum.
“That’s how I like to see the market performing. It’s not like Auckland, where people will get nervous [over] very significant price rises, and as various commentators say – it can’t keep going,” he says.
“I think that when you are looking at an area to invest in you have to look at what it can offer in terms of health, education and cultural facilities; so I think New Plymouth by comparison to a lot of provincial locations is well positioned,” he says.
Growth predicted
New Plymouth District Council group manager of strategy Liam Hodgetts says residential subdivision activity is strong in the city.
“We’ve been building 350 homes a year for the last 10 years and that translates to 800-1000 people a year,” he says.
The population is expected to grow at 9.2% in the next 10 years, which is top of the medium growth per capita. By 2043, it’s estimated there will be 65,000 residents, up from 56,000 today.
While the dairy and oil prices have suppressed the market, Hodgetts says they never lose population from these industries long term as contractors always come back.
The council is fortunate to have forward planning framework and has a robust greenfield development programme, he says.
New Plymouth’s subdivision Bell Block has capacity for 15,000 people. It mainly consists of three- to four-bedroom family homes on 700-800m² sites, and amenities include supermarket, strip retail and public pool. It is a 15-minute commute to the CBD.
New Plymouth’s retail activity has seen an increase in the past two to three years and tourist activity is on the rise.
Venture Taranaki and the Department of Conservation are developing an alpine walk to be called the Taranaki Traverse, with the idea it will become one of the top 10 great day walks in New Zealand. It will take people across the mountain, and then down in to town to enjoy the restaurants, he says.
“There is a big push to make Taranaki a destination and to brand us. The Len Lye and coastal walkway and WOMAD – that story stitched together is quite impressive. We can become an international destination,” he says.
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