KEY POINTS:
Patrick Fontein, who is developing the $400 million Kensington Park residential housing estate north of Auckland, has just sold 21 houses for $14 million.
And he said yesterday that as he had fully expected the property market downturn, he had known when he had started that he would be catering to flat demand levels.
"Even though the rest of the property market is pretty flat or stuffed, we have managed to sell these houses in the last six weeks," he said.
International trends showed that in a flat or recessionary market buyers became more picky and took longer to make up their minds.
"If during this thinking time, before going unconditional, they don't like what they have seen, they get buyer's remorse," Fontein said.
"In buoyant markets, people don't have sufficient time to reflect and they have to buy quickly, otherwise they think they will miss out.
"In a booming property market, even poor-quality properties often keep rising in value, so even bad purchasing decisions can seem good ones."
Fontein, Kensington's design chief Glen White and sales/marketing director Mike de Seymour took a two-week study tour of 40 master-planned communities in the United States in October. This was the second trip by Kensington staff studying US housing trends. They first visited 26 master-planned communities in 2006.
"Most of the US residential property market is flat and prices have dropped in many areas," Fontein said.
"Considering the New Zealand market was turning softer and would continue to do so this year, we spent a lot of time investigating and reviewing how developments perform in a flat market."
Staff examined what type of properties were still selling, which were most affected by the slowing market and the characteristics of slow-selling houses.
"Poorly conceived or poorly executed developments suffered far more than well-executed developments. We saw examples of developments of 50 to 200 houses where there had not been a sale in nine to 12 months. In these sorts of developments, if sales did occur, prices would likely be 30 per cent to 50 per cent below the last sale," Fontein said.
"We spent some time in Florida and reviewed these trends in depth," he said citing Rosemary Beach as a quality master planned community near Seaside, which inspired plans for the Orewa township.
Last year, the Rosemary Beach project had its second highest number of sales since the project started in 1995, Fontein said.
"Sale prices are staying steady at about US$10,000 ($12,500) per sq m.
"At www.seasidefl.com, prices have risen so strongly for the last 25 years, that houses now sell for above US$10,000 [per] sq m. Re-sales slowed down substantially last year but prices have not moved much. We then visited a development four miles west of Seaside. This development attempted to replicate Seaside but missed out on many aspects. They have a number of well-built houses for sale in this development at about US$2700 a square metre. Most of these houses are not selling."
Buying houses was an emotional issue and people wanted to feel good in the environment they were buying into, Fontein said.
Houses at the Orewa development will have access to fast broadband services through fibre-to-the-home connections.
KENSINGTON PARK
* 600 houses being built at Orewa.
* Corner Puriri Ave and Centreway Rd.
* $599,000 to $1 million-plus each.
* Inspired by Florida's Seaside, used in the movie The Truman Show.
