Kaitangata price rise fears after small town swamped with takers for property offer
The small South Island town of Kaitangata has been inundated with thousands of inquiries about its property package deals and it isn't prepared.
Now those behind the promotion have put sales on hold until the end of the week amid fears some investors are looking to take advantage of the popular offer through land banking.
Kaitangata, a town of just 800 in the Clutha District, made a modern-day plea for settlers last week.
The town, located 10km from the relative metropolis of Balclutha, has issued a prospectus for potential residents that comes with the ultimate incentive: For $230,000 you can get a brand-new 3-bedroom house and some land.
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Kaitangata and District Promotions public relations facilitator and local dairy farmer Evan Dick said they had been forced to pause on the selling of the packages after being inundated with thousands of inquires from New Zealand and around the world.
Dick said the paperwork around the sales needed to be amended to stop big investors land banking and falsely pushing up property values.
Land banking is the practice of buying up parcels of land for future sale or development.
The team behind the promotion is working to get some "organisation and professionalism" behind the deal.
The new terms will include a provision that says people buying the land have to build within two years, to stop them buying up land, not moving in, and waiting for prices to rise in order to make some money, Dick says.
Sales are expected to resume by the end of the week.
Dick said the real estate agents dealing with the inquires had received about 9000 calls and emails, and hundreds of those were genuine.
"At the end of the day, people have to realise that it's only a small town.
"We don't want hundreds of people in here. If we got 30 or 40 new houses built in our town, that would be a dream come true," he said.
"It'd be a small solution to a big problem."
In some ways the hype around the promotion had been great - Kaitangata wanted more families to move in.
But the global media coverage had also drawn the attention of investors looking to make money off the situation.
One family, which lives in Queenstown but owns land in Kaitangata, had already pulled out of offering its land for sale as part of the promotion.
The family thought it'd get more for the land in a couple of years time, gauging by the enormous interest in the deals.
The story blew up even further after a US media outlet incorrectly reported people would be paid $160,000 to move to Kaitangata.
The Clutha District Council quickly put an end to the rumour but not before Mayor Bryan Cadogan's phone started ringing off the hook.
Dick said he never expected there to be such a huge response.
"We just weren't prepared....
"It's absolutely nuts, it's all over the world. It's all out of control."
Dick said the response showed "the plight of the world".
People were desperate for a safe place to live and to bring up their families, he said.
The team behind the proposal, including Kaitangata and District Promotions, Clutha District Council, local lawyers and real estate agents held a meeting on Monday night to address the mayhem and come up with a plan to "get some normality back".
A public meeting about the land and house packages would be held on Friday.