Seaside dream is in reach

Mangawhai offers an amazing beach and harbour. Photo / Supplied

The Kiwi bach is affordable again. Eighty minutes north of Auckland, Mangawhai offers an amazing beach and harbour, plus the chance to buy land for $80,000 that is "either a 10-minute walk or two-minute drive to the beach, put a little bach on and be in with all your services for $250,000", says Bayley's Mark Macky.

As coastal property prices soared in the boom, the Kiwi bach dream seemed out of reach. But the bubble burst and section prices have tanked in favourite holiday spots, particularly where mortgagee sales are involved.

The property sector that has felt most pain is bare coastal land that is not right beside the sea. For land five minutes' drive from the beach where there are no views, prices have fallen 40 per cent, says Macky - "and that's if you can find a buyer".

Mangawhai tops the list for section oversupply, as well as Far North areas, including Mangonui, Coopers Beach, Cable Bay and the Karikari Peninsula.

Macky says loose council development protocols fuelled a huge amount of speculative development in Mangawhai, and the boom saw much speculative buying - where investors paid $5000 deposits before a development had resource consent.

They secured a title intending to on-sell before settlement. A few did, and did reasonably well, but Macky says the majority were caught when the market turned.

Some investors in Mangawhai subdivision The Sands, who didn't intend to settle but had to, paid $170,000 for sections that are now on-selling for $90,000, he says.

"They were hoping for a quick, speculative play in the market, which is always dangerous. Now they just want out."

Not all buyers were sucked into the prospect of making quick money - some were would-be holiday homeowners lured by the marketing fallacy that subdividable coastal property was going to run out.

Deposits as low as $5000 on sections in new subdivisions tempted them into the market before they would normally have been able to get in.

"These buyers represent what I call the stolen generation - they got tempted into buying ahead of time," Dickens says.

"The next generation of buyers are, to a significant extent, already in the market. So who will buy from the developers, burned investors, and remorseful would-be holiday homeowners over the next decade?"

Sections in other Mangawhai subdivisions such as Nautical Heights and Norfolk Rise have been discounted from $150,000 to $100,000 because of oversupply, but face a long queue to sell.

Dickens says, on average, asking prices are well above the median price that has been achieved in the past year, but lower benchmarks are being set by developers offering discounts and by forced sales.

Bayley's Chester Rendell had 16 mortgagee sale properties at Cable Bay going for about a third of their rateable value and four of them are left. Two have rateable values of $210,000 and $220,000 respectively, but asking prices of $72,000 and $75,000.

The other two have rateable values of $335,000 and $345,000 respectively, but asking prices of $114,000 and $118,000. The sections range from 919 to 8353sq m with views and telephone and water services to the boundary.

Another 10 serviced bare land sites in Paihia, Bay of Islands, go to mortgagee auction this month. Seven lots in the subdivision sold under the hammer last month for between $50,000 and $140,000 - all well under their CVs of $310,000 to $380,000.

Andrea Mackenzie, of Harcourts North Coromandel, says suitable sites for the Kiwi bach dream have dropped in price there. Sections with ocean views in Tuateawa that were selling for up to $365,000 have dropped to $185,000.

In Port Charles, she has two waterfront sections with no restrictive building covenants for under $300,000. And in Whitianga, Dickens says it will take "an avalanche of new demand" to quickly correct the adverse demand-supply balance faced by would-be vendors.

Massive coastal subdivision activity, much of it investor funded, created enough sections to satisfy more than nine years of demand if sales remain at recent trough levels.

Mangawhai's subdivision oversupply

The Sands

This 200-section subdivision at Mangawhai Heads came on the market around 2002 before titles issued. First stage sections sold from $90,000 to $135,000, stage three and four sold from $145,000 to $170,000 and stage five is selling slowly at $125,000. There have been resales as low as $89,000.

Parklands

Adjacent to The Sands, this subdivision came on the market around 2004 in two stages with a starting price of $99,000 and was snapped up by speculative investors. Some came back on to the market as title approached and sold for $130,000 to $170,000 to investors and owners who have built. Others are on the market from $100,000, with not many sales presently.

Nautical Heights

The top price paid for a section was $265,000 in 2006. Three have sold this year for $90,000 to $130,000, but most are still for sale.

Norfolk Rise

One of the few subdivisions in Mangawhai with no covenants. A two-stage development popular with purchasers wanting a cheaper bach by relocating a used house to a site and doing it up. Sections are on the market around $150,000, but are not selling.

Bargain baches
Once you've bagged your bargain section, there are still numerous inexpensive options for basic accommodation to be found by thinking creatively.

A good place to start is at a building removal company such as Craig Walker Building Removals in Kumeu. Stock ranges from new buildings, including ablution blocks for $12,000 and two-bedroom sleep-outs with decks for $28,000 to older bungalows for $47,000 or Victorian villas for $110,000.

Many portable options are available as well - Wellington's Atelier Workshop offers a portable bach using a 6m shipping container that unfolds to a 36m living space. Power, water and sewer independent, it will set you back around $85,000.

Hidden costs
Property consultant Adrian Low of SMLO advises that the same due diligence is required when buying a section as with any property. Watch out for:

* Covenants, consent notices and caveats restricting what can be done on the site, such as removing trees or meeting a high standard of building specification.

* With mortgagee sales, ensure you are buying a clean title with no debt attached.

* Many coastal properties are on sand or low-lying land and a geo-technical report is required. Council bylaws restricting caravans and camping or using the site without septic tanks and treatment systems or connection to wastewater infrastructure.

* Existing structures may not be legal on council records.

* Can you finance the property when interest rates rise?