Regional review: Prospecting Rodney
After steady development in the Rodney District over the past few years, what aspects of the region are paying dividends? Diana Clement investigates from an investor’s perspective
Sunday, December 6th 2009, 12:00AM
by Diana Clement
Rodney District, some would say, has it all. That's because there aren't that many parts of the country where you can buy a tidy three-bedroom rental, minutes' walk from the beach, and commuting distance to a major centre for not that much more than the national average price.
This district, on Auckland's northern border, offers just that. Three-bedroom homes are priced from $240,000. Tenants have the choice of finding a job locally, or nipping down the motorway to Auckland for work.
Once the home of many Aucklanders' baches, this largely coastal area has become increasingly developed over the past 30 years. And as Auckland's northern motorway is extended, Rodney gets closer in commuting minutes.
It is, however, not one homogeneous area. There are three regional centres that provide work: Wellsford to the north, Warkworth and Orewa. To the west of the province are the towns of Kaukapakapa, Helensville and Huapai/Kumeu, which have areas of industry.
The geographical areas of interest to property investors are mostly further south and west. The top spots for investment property are the western end of Whangaparaoa, which offers prime investor property, along with parts of Orewa, Warkworth and Wellsford. To the south-west the small towns of Kaukapakapa/Helensville/Huapai and Kumeu are viewed by some as an extension to west Auckland.
A good chunk of the eastern coast of the region running from Pakiri to Waiwera contains some very sought-after beaches with large and expensive developments with many thousands of baches. Prime Minister John Key even holidays at the newly developed Omaha Beach.
There are, however, a significant number of regular rental properties at Snell's Beach along with pockets at nearby Matakana, Omaha and Leigh.
If you look at bond statistics Gulf Harbour also has a considerable amount of property owned by "investors" - some of whom bought from the likes of Blue Chip and other packaged property companies. In the current market some of the stock at this eastern end of Whangaparaoa certainly appears to be for sale at bargain basement prices.
The area comes with several problems, however. Much of the housing in the area was built during the leaky home era - which doesn't of course make all houses leaky. There is also a greater percentage of renters than was anticipated when the suburb was developed, says valuer Jon Gaskell, which could be argued to have lowered the tone.
The other problem is that anyone who wants to commute by road to the North Shore, Auckland or elsewhere, faces notorious bottlenecks to get off the peninsular, although there is a limited ferry service to central Auckland.
A $217 million plan to build a "Penlink" from the peninsula to State Highway One at Redvale, reducing trip time by up to 15 minutes, has been shelved for now. But if it does go ahead it will boost property values in the Gulf Harbour area.
At the end of October there were 29 properties for rent on TradeMe from Gulf Harbour, compared to 20 for the traditional rental suburb of Stanmore Bay; 16 in Warkworth; 13 in Wellsford and 26 for the whole of Hellensville, Kaukapakapa, Kumeu, and Huapai.
One of the problems for investors right across Rodney, says Gaskell, is the yields. They're not good and local investors are usually buying for long-term capital growth - a conclusion that property finder and manager Brigid Curran also comes to.
On the other hand, one advantage of Rodney, says Gaskell, is that there are fewer problem tenants than a landlord might encounter in South Auckland. Curran says areas such as Gulf Harbour are favoured by South Africans and the entire Orewa/Whangaparaoa peninsula is popular with immigrants from the UK.
According to QV Insider, the gross yields at August 2009 ranged from 3.60% for Rewiti/Kumeu/Riverhead (Kumeu), to 4.50% for Orewa/Whangaparaoa. The 3.60% figure, however, is skewed by the fact that the house prices include more expensive lifestyle blocks, not just urban homes.
Compared to New Zealand, which had a 0% gross yield growth to August 2009, all areas bar Gulf Harbour exceeded that, with gross yield in Kumeu growing by 12.50%.
Sales growth sat at 0% annually nationwide for the same period, losses were showing right across the entire district with the worst, -8.70% in Orewa/Whangaparaoa.
Curran, who has run her business Property Finding and Management for more than 15 years, points out that those are the medians and there are properties with yields in the 7% to 8% range. She favours Red Beach and Orewa for her investor clients. In the current market she is seeing downtimes between tenancies in other areas such as Gulf Harbour, Helensville and the twin towns of Huapai and Kumeu.
"Orewa is a brilliant area and we never have downtime there."
Red Beach is popular for its schooling and proximity to State Highway 1. Nearby Silverdale is also blessed with good schools including the hugely popular Christian school KingsWay and the Stella Maris Catholic Primary School.
Curran says a typical Red Beach rental property would sell in the mid $400,000s and would bring in around $400 a week in rent. The lowest end of the market comes in inland Stanmore Bay. Prices are lower and so are rents.
If an investor's number one consideration was yield, Curran says she would look in Orewa. If it was capital gain, then Orewa or Helensville might be the answer - although she warns that rental vacancies can be high in Helensville. For those with low deposits a "little cheapie" in Stanmore Bay is recommended.
Thanks to the fact that Rodney's prices have dropped more than the New Zealand average there are some bargains, says Curran - especially in Orewa. "Some (owners and investors) have lost jobs and others have overextended themselves financially."
The south-western end of the district doesn't have a lot of rental property, says Alan Hyslop from Barfoot & Thompson, in Kumeu.
The majority of rentals are in Helensville where a three-bedroom property starts from $300,000. Petrol prices have kept property prices in the town down because many people commute half to one hour to parts of Auckland. There is a relatively new once a day train service to Auckland and back, but so far it hasn't proved hugely popular because of the time involved in commuting.
The other area often forgotten by investors, but with reasonable numbers of rentals is the Warkworth, Wellsford and Snell's Beach area. Prices in Wellsford also start at $300,000, and around $350,000 in the other two centres, says local Harcourts owner Barry Gillespie.
The wild card in these areas, which could lead to improved capital gain, are a planned road by-pass of Warkworth on State Highway One and also the extension of the motorway north all the way to Wellsford, for which there are funds available already, says Gillespie.
The total number of new dwelling consents has fallen in the district, but at a slower rate to New Zealand as a whole. Total dwelling consents for the year to March 2009 in Rodney were 23% below those of two years earlier.
Even so, there are a number of residential, retirement, and commercial developments in progress currently. They include:
- Ryman Healthcare Village, Orewa
- A residential development at Silverdale North
- Whisper Cove, Snells Beach
- Kensington Park, Orewa
- Summerset retirement village, Warkworth
- Stockyard Falls Retail Centre, Warkworth.
The Rodney District Plan allows for future urban zoning in Silverdale North and Kumeu/Huapai. Silverdale North has recently been rezoned and Kumeu/Huapai is in the process of being rezoned. Other areas with significant areas of future urban zones are Warkworth, Riverhead, Helensville/Parakai and Wellsford.
Rodney's population is growing faster than Auckland or New Zealand nationally, with large numbers of new housing developments completed over the past decade. Resident population growth was 2.90% per year for the 1998 to 2008 decade compare to 2% in Auckland and 1.20% nationally. Employment growth in Rodney sat at 3.60% for the same period compared to 2.80% in Auckland and 2.40% for New Zealand.
On the employment front Rodney is suffering, as are other areas of the country. A significant proportion of working people in the area commute to Auckland. Within the region the biggest employers are in mining/quarrying, construction, and forestry/logging, according to economic forecaster BERL, which was employed to review the district's economy to June of this year.
The five key primary industries in the district are horticulture, viticulture, commercial fishing and aquaculture, dairy and quarrying.
One worrying figure from the BERL research in the current economic environment is that one in five employees works in construction trade services or general construction - industries hard hit by the recession.
BERL did find that the Rodney District grew more rapidly in terms of GDP, employment, and business number than either the Auckland Region or nationally - although labour productivity growth is below average.
Tourism plays a significant part of the economy of Rodney with the coastal drawcard as well as other attractions such as the thermal resorts at Waiwera and Parakai near Hellensville.
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