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New Zealand residential property prices may be cooling in the big cities, but there's value-a-plenty in the fringe areas and smaller cities and towns.
Ok, so the New Zealand property market only scraped home with a 10% gain for the year ending December 2007. Perhaps to some that might be a disappointment. But to me - and to all of you who have been in the New Zealand property market for some time - it's hardly a bad result!
However, the cooling effect on property prices looks set to continue for at least the next year. So, for those of you looking to invest in property in the near-term, it's important to seek out "real value".
Auckland HOT PROPERTY spots in 2008
If you cannot bring yourself to look further than Auckland, you'll have to go further out into the suburbs for any real chance of finding value in the Auckland property market this year. But there are no guarantees you'll find any, either!
Experts tip parts of West and South Auckland as the most likely places for counter-trend property growth. But then again, "experts" were telling us to SELL our investment properties - or at least down-size our portfolios - as far back as December 2003!
Here's the bad news: according to well-known property investor and mentor,
Kieran Trass, "if sales volumes drop any further from their current level, we might end up with no hot spots in Auckland this year at all!"
So, if Auckland is no longer "flavour of the month" for the next wee while, where to next?
Te Kauwhata investment property opportunity
Not too long ago, you would've thought I was "intellectually damaged" for proposing Te Kauwhata as a future HOT SPOT. After all, it boasts a population of around 1,100 - except in the weekends when all the out-of-town golfers turn up in their droves to whack a small, white ball around one of New Zealand's finest rural golf courses!
So why the change of heart?
Let me answer that question with a question: "Do you know how much residential property prices increased over the past decade in Paremoremo - a small semi-rural township northwest of Auckland, over-looking the country's largest and most secure maximum security prison?
Answer: "Just on 110%!"
My point is this…
Just because a town is built near a prison DOESN'T automatically dampen its chances for substantial capital gain over time! And yes, Te Kauwhata falls neatly into 'one such town'.
Nestled on the edge of Lake Waikare, Te Kauwhata is snuggly located equi-distance between Auckland and Hamilton (about 45 minutes either way). It may be a small country town, but given the cost of living in nearby Auckland and Hamilton, it is a small country town where a lot of people now want to live in or near.
What will drive property prices in Te Kauwhata?
For starters, there are 341 new jobs being created as a direct result of the construction of the prison. Almost all the correctional services employees will be brought in from other regions. Assuming the age-old rule of thumb for occupants per household (i.e. 2.5 persons per household), this represents a potential population increase in excess of 75% for the Te Kauwhata region!
Such an increase isn't easily absorbed into existing infrastructure.
Additional classrooms will need to be built - and ultimately additional schools. The retail sector as well as the building sector will also boom.
When will Springhills Correctional Facility be operational?
The facility itself is complete. Full muster (i.e. occupancy) will be completed by the middle of this year.
What are the property investment opportunities available?
At this time of writing there are a limited number of brand new, rent guaranteed residential homes being built by G.J Gardner Homes and marketed through Compass Property Investments. These brick and tile homes will be superbly constructed; consisting of 4 bedrooms + study, full landscaping with paved walkway, master bedroom with ensuite, and double lock-up garage. Importantly, they will be within easy walking distance of Te Kauwhata High School.
If you'd like to download a specifications sheet on these rent guaranteed properties and see for yourself how promising the Te Kauwhata investment property opportunity really is, click here.
