Section shortage chokes growth

Last updated 05:00 24/11/2012

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Major players in the development of some of the city's newest suburbs are concerned bureaucrats and tight credit are stifling a property market that has seen buyers queuing overnight for sections in Rototuna.

Planners and surveyors CKL planning manager Bevan Houlbrooke says the global financial crisis has had the biggest impact on the supply of sections, weeding out the small players and limiting developments to small stages.

"Traditionally there was a lot of sections being created, but since 2008 we've seen a drop off, so that's coming to a head now. They haven't been created but demand has picked up now, and that's why we're getting people queuing up."

Council spending on infrastructure also limited section supplies, he said.

Availability of residential sections relies on private landowners bringing development forward - which takes finance - and financial commitments to infrastructure development by the council through its 10-year budgets.

As an example, Rototuna's proposed town centre - north of the defacto centre already developed on the corner of Thomas and Horsham Downs roads - was private land whose owners would need to bring a proposal forward, and then agree infrastructure requirements and funding with the city council.

New urban areas do not come cheap. The council first has to upgrade existing roads, and build new arterial roads, water, stormwater and sewerage mains.

Ian Patton's Glaisdale is developing 300 sections towards Kay Rd, but doesn't expect the next tranche of about 60 sections on stream until November 2013.

"The council is so far behind, we're in an area we were told would be rezoned about three years ago, and they're still going. They complicate everything."

Rising costs for developers and tight credit from the banks also helped create a bottleneck in section supply despite hundreds of hectares yet to be developed.

"In our area there's 1000 sections, it took us two years to get consent, we're only just getting on with infrastructure. It takes so long to get anything done."

Developers were not deliberately staging release of sections to up their profits.

"We used to pay $9000 a section to council for development contributions, now it's $32,000. The price had to go up. The only reason we're developing sections is because the price has gone up, otherwise we wouldn't bother.

"We're an endangered species. You should be putting money in a tin when you go to the bank. There's not many developers left, that doesn't help supply.

"People want to live here, that's why 60 people are getting up early in the morning and queuing up to buy sections. The demand is there," he said.

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Since 1999 "greenfields" development on the city's northeastern fringe has made relentless inroads into farmland, comprising about half of all growth.

Council consents data shows that to the end of last year Rototuna accounted for 4605 of the 9500 new houses consented during the decade since 2001.

It also reveals that until the property market collapsed in 2008, infill and greenfield Rototuna consents were tracking neck-and-neck. However, since then Rototuna consents have been issued at roughly twice the rate of infill.

City Environments general manager Brian Croad said section supply was dictated by council and landowners' ability to develop their landholdings.

"On our side there's no doubt it's challenging with supply of infrastructure."

- Waikato Times

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