Over the last little while we have seen house and section values reduce from the peak seen in early 2022. It’s no wonder, with the Reserve Bank rising the OCR and threatening us all with a recession. People simply can’t or won’t borrow enough money to pay those high prices right now. So sales and values slump and people tend to put their plans on hold. History tells us that this can’t last forever and the cycle will reverse again. Interest rates will fall and demand will come back – possibly only two years away according to some predictions.
So, I hear you say, what's this got to do with subdivision and land development? Well, you may be surprised but the process that you need to navigate through to subdivide your land and create the sections that are going to be in demand can take a similar time. Our clients taking action now could, in a couple of years, be in a position to sell sections in an environment of falling interest rates and rising prices with people having the capacity to borrow again.
Getting resource consent to subdivide from your local council can take many months as they work through the intricacies of the Resource Management Act. Councils seem to be taking more and more time these days and asking for a whole lot more information in the process. This could get worse before it gets better with new legislation on the horizon. That in itself is a good enough reason to start the subdivision process as early as possible.
To prove to your council that a subdivision is viable we need to source reports from many experts in fields such as geotechnical, drainage, ecological, and traffic engineering to name a few. All this must be carried out before applying to the council for Resource Consent.
Following consent from the council there will be construction required for drainage, electricity connections and driveway entrances to name a few. This all takes increasing amounts of time in a stretched economy where much focus is going on repairing and upgrading roading and other cyclone-damaged infrastructure. We are not expecting the time frames for construction to improve any time soon, so the sooner you start the sooner you get your new titles.
If you have any thoughts about subdividing over the next few years, there may not be a better time to talk to the subdivision experts. Feel free to give us a call for a heads-up on the possibilities.