Backing the regions
Updated: Oct 19, 2020
Killarney Capital recently caught up with an old friend – the magnificent Ranfurly Shield. It hasn’t paid us a visit for five years and we’re hoping, like last time, it decides to hang around for a while.
Hawke’s Bay has a proud history with the Log o’ wood, having first claimed it nearly a century ago. This early reign spanned 25 matches and stayed the longest reign (by matches) until Auckland eclipsed it in the 1960’s. Hawke’s Bay then regained the Shield in the late 60’s and held it for 22 matches during an era that captured the imagination of the region. More recently, the mighty Magpies held it over the end of the 2014 season in a 12-game reign, after earlier holding it for a flash-in-the-pan 6 days – barely enough time to parade the Shield and the famous Hawkeye down Emerson Street.
There is something about the Shield that makes it more than just a sporting trophy. It brings out the most parochial of feelings than any other competition – sporting or otherwise – in the country. It requires teams to put their best effort out onto the paddock time after time, because the competition will be hungrier than ever. It also gives the smaller provincial regions a chance to showcase their talents against the city boys. Following Auckland’s dominant reign during the 80’s where they even took the Shield on the road, the regions have fared pretty well. Since the turn of the century it has changed hands some 28 times, passing through regions including Southland, Otago, Waikato, Bay of Plenty, Taranaki & Counties-Manukau, as well as the big three centres.
In some respects, the same goes for the property sector. The big 3 cities often hold centre-stage, but increasingly the regions are standing beside if not out-performing them. If there was a Ranfurly Shield for median house prices, Southland would currently hold it (based on annual increase) with Hawke’s Bay, West Coast, Otago & Northland nipping at their heels. In the wake of Covid-19 many of the regions are offering greater housing affordability, relatively better-than-even prospects of securing work (or, increasingly since Covid-19, the ability to do a big city job remotely), less traffic, little threat of Covid-19 re-emerging, and a host of other lifestyle benefits.
There is anecdotal evidence to support the numbers. Houses in Hawke’s Bay are in short supply with waiting lists on future section stock. Sections have also been flying out the door on a subdivision development Killarney Capital is funding in Otago, and section sales have seen a resurgence for another client in Bay of Plenty. During lockdown there was a general consensus that pre-sales could be hard to come by later into 2020, yet the opposite has rung true so far.
Like the Log o’ wood, the mantle for the ‘top-dog’ of property growth is likely to bounce around between regions over the coming months. As the issues surrounding Covid-19 become less prevalent - particularly when international borders re-open - there will likely be increased migration flows (both internal and external) back into the main centres and Queenstown, fuelling those markets.
Killarney Capital prides itself on its ability to understand both people and properties in provincial New Zealand. We currently fund projects all across the country, with over half sitting outside of the main centres. We love to back winners and believe that there is plenty of reasons why the regions are winning at present. Drop us a line to talk about your property development project, no matter which team you support!