Sun may be setting on land boom

19:52, Dec 16 2012

The value of the Southland district has risen by $450 million, much less than the heady increases of several years ago which indicates the boom times for land sales in the south are over.

Latest revaluation reports from Quotable Value New Zealand show the Southland district's overall capital value is $19.27 billion, up 2.4 per cent on the $18.8 billion it was valued at in 2009.

The greatest contribution came from rural properties, which increased 2.7 per cent to a total capital value of just over $13.7b.

But the rise for rural property capital value is much lower than the district's staggering 51 per cent rise in 2009.

Southland Federated Farmers president Russell MacPherson said a combination of declining prices, the global financial crisis and more conservative lending from the banking sector had slowed down the rural property sales.

"Meat, wool and milk prices have all come back so people can't pay as much for farms," he said.


New land use regulations for non-dairy farms had also had an impact on their value, he said.

Mr MacPherson said there had been noticeably fewer rural sales during the past few years.

"If you look at land sales in Southland it's been hard to sell properties," he said.

Harcourts Invercargill rural sales manager Murray Jackson said the small increase in rural property capital value was to be expected after the 51 per cent increase during the previous review period between 2006 and 2009.

"Things went a little bit crazy during a time of big price land grabs," he said. "There has been a slow down in the rural sector during the past few years and a return to more realistic values."

The 2009 increase was so big it couldn't possibly be sustained, Mr Jackson said.

The value of Southland's residential properties and value of sections have also come down.

In the latest report, the value of Southland's residential land with buildings fell by 3.7 per cent, while the residential land value fell by 8.8 per cent. The average value of a house and section was $211,000 and the average residential section value was $69,000.

At $307,000, Te Anau had the highest average for house and section, followed by Manapouri ($258,000), Winton ($252,000), Stewart Island ($251,500) and Wallacetown ($226,400).

Quotable Value Ltd southern manager Tim Gibson said the report was driven by the market value of properties through a study of property and land sales.

Residential sales in the more rural areas had come back during the past few years, he said.

Increased development and over-supply had forced down values in Te Anau and a cool-off on coastal properties had affected Stewart Island property and land values, he said.

Despite the overall drop in property and land value in Southland, there were communities bucking the trend, Mr Gibson said. Edendale and Wyndham had an increase of 12-13 per cent in capital land value with land value for Edendale rising by 110 per cent.

There had been significant housing development and sub-divisions in Edendale and the council had provided water and sewerage infrastructure, Mr Gibson said.

Southland District Council transactional accountant Jamie Cunningham said the region's value played a role in setting rates but the council did not anticipate significant changes to next year's rates arising from the revaluations. However, final budgets for 2013 had not been developed, so it was not known exactly how rates would be affected, he said.

The council based its rates on factors including capital value, uniform targeted rates, land value, and improvement value, he said.

Southland District Residential Revaluation 2012

Capital Value (house + section) Land Value (section only)
Lumsden $129,600 $27,000
Balfour $121,400 $13,700
Riversdale $183,200 $29,600
Wallacetown $226,400 $37,800
Edendale $179,000 $68,900
Wyndham $113,700 $19,000
Manapouri $258,000 $106,000
Te Anau $307,000 $101,000
Stewart Island $251,500 $112,200
Winton $252,000 $80,500
Ohai and Nightcaps $64,700 $10,000
Mossburn $127,000 $20,500