Epsom Weekly - 04/04/2024

Deal with the company that does the most business, there is a reason for it.

Averaging more than 1 sale a day since January 2024

We have Extraordinary reach and achieve Extraordinary results!

Getting your property SOLD successfully! Contact our award winning Epsom team for an obligation-free appraisal.

Tony Alexander: Property developers ‘are staggering’ - cash woes raise fears of a collapse

We’re in a buyer’s market now and that spells trouble for those building multiunits.

ANALYSIS: Prospects for property developers in the multi-unit sector continue to look negative, with some extra deterioration potentially underway. This is because of the now 21% rise in the number of properties listed for sale compared with the low reached in July last year. The total is the highest since late-2015 and buyers have plenty of choices in most parts of the country.

One way to measure stock availability is to compare the latest total with the longterm average. For the country overall, the number of properties which buyers can peruse is 14% below average. But Auckland stock levels are 15% above average while the rest of the country is 25% below.

In Auckland the outcome of the Unitary Plan has been to greatly spur densification and buyers have plenty of purchasing options – if they can raise the necessary finance. This raising of finance is where things are troublesome for the multi-unit developers.

They are sitting on land which may have been purchased when house price growth was strong and demand for new builds was soaring. They’d like to build units and sell them as quickly as possible because the interest cost of holding the land is much higher than average as a result of tight monetary policy.

In fact, the main banks have plenty of grey-haired people who have been around through many credit cycles and they would have advised caution in lending to the many developers who grew strongly during the pandemic. This means many developers have had to rely on second-tier financiers to provide funding for their land purchases and these lenders typically charge higher interest rates than the banks.

To cover their debt-servicing cash outflows the developers need to sell what they’ve already built, are part-way through building, or would like to build. But buyers are wary following stories of cost escalations and cancelled contracts. They also have problems getting finance because of high interest rates and the previous government’s changes to the Credit Contracts and Consumer Finance Act in 2021. Plus, as noted above, they have plenty of already built properties which they can view and maybe purchase.

Developers are responding by offering various deals to try and get buyers to purchase off-the-plan or buy a unit near completion. But figures released by ANZ and Roy Morgan last week show that consumer sentiment has just fallen sharply. Affected no doubt by confirmation that our economy has gone back into recession and reports of layoffs in the public and private sectors, people are saying they’ve going to put their wallets even further out of reach.

For retailers this means poor sales and big continuation decisions for some. For developers it means the clock is ticking on the time their financiers will allow them to try and generate cash to meet their debt servicing obligations. Or, as a banker put it recently – “the rhino is staggering”. This means the effects of the cash inflow shortage are being felt and falling to the ground may be imminent.

I have no idea which developers are most at risk. But the fact that five have contacted me recently to enquire about me making presentations for them, accepting their advertising, and writing material for them when none ever have before, I take as my own anecdotal evidence that their problems are deepening.

-TonyAlexanderisanindependenteconomicscommentator.Additionalcommentary fromhimcanbefoundatwww.tonyalexander.nz

Thinking of buying or selling a property? Please contact our award winning team today. We look forward to being of service to you and help with your property needs.

Sales Property Management

Ph: 09 520 6221

Email: epsom@barfoot.co.nz

Ph: 09 529 0969

Email: rental.epsom@barfoot.co.nz

Limited To Parcels

Some older properties, particularly in the Ponsonby, Freemans Bay, Herne Bay and Devonport areas of Auckland, are “limited as to parcels”. This means that the area and boundaries of the land are not guaranteed to be accurate.

How will I know If a property is limited as to parcels?

Thankfully, it is easy to identify if a property is limited as to parcels. There will be a note at the top of the record of title stating “Limited as to Parcels”.

Must this be brought to the attention of buyers?

Yes. Buyers must be advised to seek legal advice and guidance before buying a property that is limited as to parcels.

Why?

Owners of these types of properties may face additional costs if they develop their property (eg. add a 4th bedroom and ensuite out the back or remove the existing house and build a new one). The Council will usually require an owner of land that is limited as to parcels to have the property resurveyed as part of any building consent application.

If the survey shows that the owner has more land than they thought, they will need to obtain the consent of the neighbours to any new boundaries. There are limited grounds upon which a neighbour can refuse to consent but, as you can imagine, such conversations with neighbours can be difficult and time consuming.

Similarly, if a property that is limited as to parcels is actually smaller than the land area shown on the title, a neighbour may request a boundary adjustment so they can build some nice townhouses. Such an adjustment might encroach upon the new owner’s prize roses, carefully cultivated kale patch or worse, a building or other structure.

There are provisions under the Property Law Act 2007 to apply for relief from the court for a “wrongly placed structure” if a house is built across a boundary. However, this is likely to both be expensive and affect the owner’s relationship with their neighbours.

So, the additional expense and inconvenience an owner of land that is limited as to parcels may face is why “limited as to parcels” must be brought to the attention of buyers. Failing to point this out to a buyer could result in a complaint to the CAC or civil action for misrepresentation.

Can a vendor have the title notation removed?

Yes. To remove the “limited as to parcels” notation from a record of title, the land will need to be resurveyed. Even though any boundary changes will need the consent of the neighbours, vendors may still want to consider resurveying their property before marketing commences to:

• Ensure the size of the land is correct;

• Avoid new owners having to provide Auckland Council with a surveyor’s certificate when applying for a Building Consent;

• Ensure any representations about the development potential of the land are correct; and

• To ensure the house/buildings on the land do not exceed the boundary.

What are the next steps?

To remove the “limited as to parcels” notation from your certificate of title, your surveyor will first need to survey your land. Then you will need to obtain the consent for the new boundaries from all adjoining property owners. If an adjoining property owner is not willing to consent, they have 21 working days to object to your request. They can only object on limited grounds.

Apple, Broccoli & Lentil Salad

WHAT to do

Auckland Writers Festival

Giving back, and making Auckland a better place to be is top of our list so we’re delighted to support the Auckland Writers Festival!

The festival will be taking place on 14-19 May at the Aotea Centre and we have complimentary tickets to giveaway. Please contact Nick Simmers if you are interested in tickets.

Click here to download the 2024 programme e-book.

Ho Listings

4/20 Cornwall Park Avenue, Epsom

Rental Properties

Click on the images below to view full details

What’s On and What’s Gone

Barfoot & Thompson Property Live Central

Barfoot & Thompson SOLD magazine