Marlborough Property Investors' Association

News & Updates

Recent updates


Light at the end of the tunnel?

Sections and apartments are often talked about as the most vulnerableparts of the property market. We have updated our table in the full report (see link at end of article) showing which regions have the most exposure to sections and apartments, relative to other types of sales. The relative rankings remain similar, although 70 percent of the regions have shown an increase in available listings of sections and apartments. This reinforces, to us, that this is an area of the property market where a large part of the correction will occur.

The section and apartment sectors of the property market – traditionally more speculative areas – are often touted as being the pockets that are the most vulnerable at this stage in the property cycle. Higher interest rates or changes in the credit cycle often mean that these pockets can experience large price swings,relative to other types of property, as demand wanes.

The table in our report (see link at end of article), which was last updated in February, shows the number of sections and apartments for sale, relative to the total number of properties on the market. It is based on data from the Trade Me website (which provided easy access to this type of data). Although it is somewhat of a crude indicator, we feelit is still reasonably effective nonetheless. The table ranks the various regionsfrom highest to lowest and also shows their movement compared with February.

So what does it show?

The relative rankings of the regions are reasonably similar to February. The rankings of first three regions remained unchanged. Those regions that had a relatively high proportion of sections and apartments for sale in February, typically still have high proportions now, and vice versa. The biggest movers of note were Selwyn, which jumped 13 places, and Franklin, which jumped 12 places. Southland continued its slide down the rankings and now sits in 31st >place, with a ratio of 19.5 percent. This is after it topped the rankings in October 2007 – when we first presented these statistics.

As the relative rankings are little changed, a similar composition remains - it's a holiday or retirement destination theme. Queenstown Lakes, Northland, Thames/Coromandel, Tasman and Taupo all sit toward the the top end of the rankings, with a high exposure to sections and apartments. This could potentially mean they are more vulnerable, and we have heard anecdotes of some of these regions experiencing large falls in house prices.

The upshot.

The supply of sections and apartments relative to the total stock of houses for sale continues to increase. This is potentially a sign of unease and is one area where we expect the housing market "correction" to play out. With both types of properties exposed to high interest rates (low yield or high carry cost); likely diminished appetites to lend; credit dislocation in certain pockets; and landbanking - which has the potential to unwind quickly, we expect to hear more anecdotes of these types of properties coming under increased downward price pressure.


Auckland city again ranks highly, with a large number of apartments listed. We have heard some horror stories emanating from the Auckland apartment market with properties selling for well under previous sale values. Part of this may be due to the collapse of some property investment companies, but it also likely to be a case of softness in the market.

Compared with February, close to 70 percent of regions have shown an increase in section and apartment listings relative to totals.

The average increase in this ratio across the regions was just over 9 percent. The median increase was slightly less, at just over 6 percent. Across the country as a whole, the ratio of sections and apartments for sale relative to total properties is 29.1 percent. This is up from 26.8 percent in February.