A Queenstowner is criticising buyers in an entry-level subdivision for selling their sections for major capital gains.
Lesley Turner, who’s helping her daughter find a property, has found seven section owners at Queenstown’s Bridesdale Farm, adjoining Lake Hayes Estate, trying to sell their lots before titles come through.
Sections originally sold in the 134-lot subdivision for between about $180,000 and $260,000.
Some were sold as house-and-land packages.
Sellers are now seeking, in some cases, more than $300,000 for the land – and, in two cases, $325,000 and $365,000.
Turner notes these buyers have only paid deposits, and have now put their sections on the market just prior to titles being issued in March.
“You’ve got to be not all that dumb to think these people are only there to make the quick buck.
“They have no intention of actually purchasing the section, it’s just to on-sell.”
Turner believes the practice is “not ethical”.
She says they should either be prohibited from reselling or if they genuinely can’t go ahead with building, should on-sell their sections for what they paid for them.
Local BayleysLocations executive director Stacy Coburn, whose firm is advertising two Bridesdale Farm sections for $275,000-plus, believes only a small minority of buyers are selling on.
Most of the large cross-section of buyers have bought to live there, he says.
Coburn notes that the market has “certainly moved” since Bridesdale sold out about two years ago, “and I guess purchasers’ situations and circumstances can change, from their initial thinking”.
“And at the end of the day everyone’s entitled to make money on their investment.”
He believes the initial vision of the development still remains.
“That’s to provide a reasonable entry point into the market, and with that in mind, Bridesdale has been incredibly successful.
“Buyers can still now purchase a new house and land in the $500,000s.
“Where else currently in Queenstown do they have the opportunity to achieve this?”
Bridesdale Farm was the first local subdivision to be approved as a ‘special housing area’ (SHA).
SHAs were created after a Queenstown-Lakes Housing Accord was signed by the local council and the government in 2014.
The accord was “intended to increase housing supply and improve housing affordability in the Queenstown-Lakes district”.
Local Happiness House boss Karen Stuart sympathises with Bridesdale owners on-selling their sections.
“That’s the way the market works.
“That might be their only way of being able to get enough money to be able to build a home in Cromwell, or wherever.”
However she warns the sellers may have to pay a capital gains tax.
Inland Revenue, she says, looked at people who bought at Lake Hayes Estate and sold before titles were issued.
The issue of pricing at Bridesdale has been raised before.
The Otago Daily Times last August reported that Mike Greer Homes was advertising a Bridesdale house-and-land package for $755,000 on behalf of a third-party owner.
That was more than $300,000 dearer than the cheapest $450,000 house-and-land packages that Bridesdale originally marketed.
Building company general manager Tane Tawera confirmed the owner would have paid about $260,000 for the land but its value was “a lot higher” now.
The house chosen for the section was also among the more expensive types allowed in the subdivision.
Queenstown Lakes Community Housing Trust executive officer Julie Scott, however, said that the $755,000 asking price “really highlights the crisis we’re in, and opportunists are taking advantage of that market”.
Last September, outgoing councillor Cath Gilmour said the government’s extension of SHA legislation gave the new council the ability to negotiate a new accord.
She wanted a mechanism included that ensured houses developed within SHAs remained affordable after their original owners sold them.