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Bare Land Prices
Anyone know the prices for residential land only in most major cities around NZ, or even the average price for NZ.
I am thinking of purchasing a piece of land around 1,000 sqm in Auckland .
Do you think bare land is a good investment?
This stock shines so bright that it \"Bling Blings\"
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Bare land historically has been a quite good investment but usually presents lousy cashflow charactersitics.
My father would hardly call himself a land speculator but he has the patience to wait and buy land during "cash-is-king" recessionary phases or at mortgagee sale and then flogging it off during the good times. He has good personal cashflows, no need for debt and a stoic propensity for inactivity. All the characterisitcs required for bare land investment. Being a lawyer is a minor cost saving benefit as well.
He recently sold the crown Jewel of his land holdings (probably a good indication of where he thinks we are in the cycle) - a bare seaside section in a well known Coromandal area he bought for $35,000 in 1986. I'm not sure of the price but I can imagine!
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Bare land is a great investment if you don't need the cashflow. Bought section in Tairua for $40k 10 years ago sold for $250k last year.
Bought section in Russell for $250k 18 months ago and that has more than doubled in value.
Get good advice about where to buy and you cannot go wrong.
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Where do you guys think the cycle is now for land prices?
The property market seems to be still healthy and bare land is getting more scarce, especially ones that are close to the city.
Do you know the national average for land prices?
This stock shines so bright that it \"Bling Blings\"
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BLING BLING, They dont make it anymore it will keep going up faster than what you build on it.
National average means nothing its where it is at that counts. macdunk
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In the long run there are only two things that count for land values: Demograhics and the allied issue of population growth. Nothing else will affect real values long term, not even inflation. While interest rates, sharemarkets, speculative bubbles and whatever else can have a short term impact, land use and fundamental demand are the only real drivers.
The increased values enjoyed by coastal property owners is a byproduct of the baby boom (demographics). Baby boomers are buying the stuff as lifestyle and retirement options. While this trend may last another 10 or even 20 years, this is a very finite event. The same buyers have not given consideration to issues like amenities, healthcare and proximity to family, all much more important when they are in their 60's, 70's and 80's than their 40's and 50's. While there will be some sustained winners (the likes of Tauranga) I'd expect a reversal of this trend as a greater proportion reach the appropriate age and chose or are forced to sell into the approximately 10 year "gap" that GenX'ers and those following will be unable to properly fill. At that point I'd expect regional coastal properties to relatively underperform in the absense of any other demographic pressures to assist. There could well even be a few 1920's Miami style deflations in marginal locations like Far North Queensland.
As the commercial, population and increasingly financial capital of NZ, Auckland would still be seen as the long term winner. As the political capital, Wellington will always be underpinned by tax dollars and so is likely to remain the most stable market, unless ACT get into parliament and slash gross tax rates to 20%! (Yeah Right!)
P.S. Probably a bit naughty to leave out Productivity Growth as the 3rd driver of property values but I kind of view that as part of demographics.
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Some good points there Halebop dude. Immigration is also a driver. With the i-net land is advertised worldwide and the foreigners and Shania Twain types love it. My bare land has not cost me 1c apart from rates- it has not even been cleared, and is still appreciating at a great rate of knots.
As MacDunk says - know where to buy.
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quote: Originally posted by Halebop
Bare land historically has been a quite good investment but usually presents lousy cashflow charactersitics.
What I have done over the last 5 years has been to make purchases in good suburbs that have an older, unrenovated house (eg: a 90 year old villa) on a decent section. They are rented out cheaply for the interim to provide a bit of cashflow cover for the mortgage, then the houses are either removed or stripped down for the wood to leave a decent section in a good suburb ready for building on...
Death will be reality, Life is just an illusion.
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Member
Hey guys, this property market is not laying down. Noticed that the prices of most properties are still on the rise. Crazy !
This stock shines so bright that it \"Bling Blings\"
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