Originally Posted by
minimoke
Well, you don’t just get a piece of land and stick a house on it. Firstly you have to buy the land and the land seller has an expectation that there is reasonable value in it. The value generally has to be higher than its previous use like market gardening or light stocking. The council has its hand up early for subdivision consent fees and here you will have to tame the RMA. Then you have to put in roads, footpaths, sewerage , street lighting, water, phone, sometimes reticulated gas. Council charges for this might be add up as it does for storm water. Also leave a bit aside for community reserves or other community services which can’t be on-sold. Add in some earth works - a subdivision down the road from me was build on an old land fill and they spent a couple of years working the land – still not nearly long enough for me to want to buy into it. But even then earthworks will be need to get the subdivision looking reasonable and of course surveyor and engineer fees. If you are being a bit flash like Pegasus town you need to build a lake and associated pumping costs, wave generator and sand importation. They are also planting 15,000 trees. Add in legal fees for getting titles sorted and then don’t forget a marketing budget and then real estate agent fees. Somewhere in there will be financing costs. Add a margin for risk and for profit which is then balanced against supply/demand to work out a final sale price.
That’s all for just buying a section in a new subdivision.
If you want to buy a section in an established suburb you have to pay for all this value but also a premium for knowing what you are buying into. For example if you buy a section in Fendalton you are buying into a reputation of “Blue ribbon, Leafy suburb” with “nice” neighbours. If you are buying into Aidenfield it has a current reputation which I suspect will evolve into Christchurch’s version of Coronation Street. You know the houses value of your neighbours in an established subdivision but look at how the covenants change over time for new subdivisions which aren’t selling sections.