Beachside bubble bursting

Property Editor·NZ Herald·

26 Apr, 2012 05:30 PM2 mins to read

Pauanui property owners are apparently keen to cash up real estate in the Coromandel holiday hot spot. Photo / APN

A glut of property sales has hit Coromandel beachfront holiday playground Pauanui.

Rodney Dickens, managing director of Strategic Risk Analysis at Orewa, found 185 houses and 151 sections for sale in sharp contrast to just 40 sold last year.

In the land for sale, 132 listings had fixed asking prices but 16 were mortgagee sales. Of the houses, 166 had asking prices.

Dickens said the resort town showed how it could take some years for property prices to adjust following a speculative bubble.

Last year, QV reported 40 house sales in Pauanui and Waterways.

"At the latest annual sales rate, there are enough houses for sale to meet over 4.5 years of demand. By any standard this reflects a huge oversupply," Dickens said.

Some sellers are desperate and quitting expensive properties for low amounts.

"The higher discounts were generally for the more expensive sections, for example $900,000 down to $630,000."

The lowest asking price for a section was "inquiries over $150,000" for a section with a rateable value of $330,000.

The median asking price for a Pauanui house is $559,000 but the average asking price was much higher at $715,000.

"Partly reflecting the oversupply, the houses that sold in 2011 on average sold at a 10 per cent discount to the average capital values that were assessed on July 1, 2009. And there is a hint that the average discount to CVs increased during the year. The average discount to CV for houses sold in the December quarter was 12 per cent," Dickens said. Evans Young of Hopper Developments said Pauanui had held up well in recent years.

Hoppers released the first 40 sections in the Waterways development there last year, he said, and eight were sold for $600,000 to $700,000.