The latest sales data from New Zealand’s residential real estate market show prices have paused for a breath, regressing some five percent from last year’s peak. However, experts from New Zealand’s largest full-service real estate agency say land values are expected to rise again as housing intensification accelerates under the Government’s National Policy Statement on Urban Development (NPS-UD)

Bayleys have recently announced it is adding to its development offerings with the launch of a dedicated New Build team that will provide sales and marketing services for off-the-plan buyers and sellers of small-to-medium residential development sites.

The team strengthens Bayleys suite of offerings for the development market, supporting its established Projects team which caters to larger-scale residential developments of 45 dwellings or more.

“The government introduction of a series of incentives for new build properties has spurred rapid growth in the new build sector which continues to yield new opportunities for homeowners as a result of the Resource Management Amendment Bill, NPS-UD and changes to tax legislation,” says Suzie Wigglesworth, Bayleys national director of residential projects and general manager for Auckland Central.

Realising potential

New Medium Density Residential Standards (MDRS) that form part of the NPS-UD will apply in all residential zones across New Zealand’s tier one cities including Auckland, Hamilton, Tauranga, Rotorua and Christchurch.

Designed to provide more vital housing in high-demand areas, the legislation enables more land parcels within urban areas to be developed with up to three properties of three levels per site without the need for resource consent – a move Bayleys says has the potential to increase the value of developable land sites.

Existing property values may be declining, yet investors are focussed on building long-term wealth with residential property and its proven capability for capital gain widely viewed as a hedge against inflation.

A government emphasis on building new homes at scale and pace offers further impetus in the form of financial incentives for those looking to invest in new.

“Sweeping recent changes including the exemption of the removal of interest deductibility against rental income on new builds and the exemption for new builds from the 10 year bright-line test, along with financial legislation which has also changed in favour of buying means Kiwis are constantly seeking guidance in this space,” Wigglesworth adds.

Bayleys says the Government’s initiative to focus investor interests on the new build market is having the desired effect with property investors increasingly moving away from existing housing supply in favour of new developments.

It says investors are attuned to the potential for growth and are looking to regions across the Waikato, Bay of Plenty and Lower North Island for the biggest increases in land value as the MDRS provides a clearer pathway for urban intensification for the first time.

Challenges facing the sector

One of the challenges facing the sector is whether the necessary infrastructure is in place to support high levels of growth within certain locations.

“Some 100,000 new homes including apartments and townhouses are expected to be sold off-the-plans in the next five years, with our new team born from the growing demand for salespeople and support specifically focused on this evolving market segment,” Wigglesworth says.

“In Auckland, locations like the Te Atatu Peninsula, Northcote, Hillsborough and Sandringham are seeing growing demand in the small-to-medium development sector. However, sellers and some salespeople are struggling to keep abreast of changes including zoning that dictate a site’s potential – and ultimate market value.

“Those that are aware, along with residential developers, are coming up against ongoing challenges in a changing market – including legislative reform, financial conditions and developments abroad which play a role in things like construction costs and demand for housing.

Bayleys says landowners, sellers and residential developers nationally will have access to a team of highly trained experts that can aptly communicate development opportunities with knowledge of the dynamic marketplace, financial considerations and feasibility.

“While Kiwis are more understanding and amenable to buying off-the-plan purchasers still need to enter agreements with their eyes open, so we will also provide valuable services for buyers in the new build space,” Wigglesworth adds.

To bridge the gap here Bayleys’ New Build team is positioned to be the expert conduit between buyers, sellers and developers, recognising the strong connection between dedicated expertise and achieving the very best result.

The New Build team’s development is a natural progression that leverages Bayleys’ existing expertise across its well-established residential, commercial and industrial and country businesses.

Bayleys’ established Projects Team has already cemented its position as industry-leading at working with residential developers creating feasibility studies, market analysis, pricing, design, and trend forecasts.

The new division aims to become the number one, go-to for all small, medium and large-scale new build residential developments in New Zealand, and the agency of choice for property owners considering selling a property that is primed for development.