Should You Invest In Rolleston? | Podcast Episode #20

Posted by Ed McKnight on 30/09/19
46385 pc

Should You Invest in Rolleston?

Listen on Apple Podcasts

Listen on Google Podcasts

Listen on Spotify

The Podcast Transcript

The Podcast Transcript

ED [00:00:08]

Hello and welcome along to the Property Academy Podcast. I am your host Ed McKnight.

Andrew [00:00:10]

And I'm Andrew Nicol.

ED [00:00:13]

And today on the show we're going to be deep diving a little bit into a specific area of of the country. I think we're going to do a couple of these types of episodes in the future where we look at specific suburbs areas or cities and talk about why we either like that area or why we think it potentially doesn't make a very good investment at all.

And today we're going to look and at Rolleston which is near Christchurch.

It's just on the outskirts of Christchurch but it's technically in the Selwyn district. And Andrew challenged me last week to go away and look at Rolleston, crunch some numbers from the Stats NZ website and come back with a bit of an analysis. So Andrew, introduce for Rolleston for us.

ANDREW [00:00:56]

So Rolleston for those of you who are outside of Canterbury is about 30 minutes from Central Christchurch. It's kind of, it's a town on its own. Funnily enough, they've they've called it the town to the future for about the last 50, or 100 years.

So everyone in Canterbury knows Rolleston as the town of the future. Now it's finally true. So I guess if you say something long enough then it eventually comes true.

Ed’s worried about what I'm going to say next.

And so Rolleston, Rolleston for me I always kind of thought of it as a bit out of town, you know 30 minute drive from the city. And anyone from Canterbury knows that 10 minutes in traffic is too much for us. And so we don't have we don't have quite the same appreciation until you know I lived in Auckland as to how long we actually drive in around the rest of the country.

The great thing about Rolleston is there's so much infrastructure there and a lot of that did come actually after the earthquakes because the land was so safe out there you know it's what we call TC1 Land. TC1 is a technical category, which is is the least likely to be affected in the event of seismic activity.

So shortened down it just means it's less likely to be damaged in an earthquake. And so because of that anyone who is in town that maybe you know had the house rattled up often they would move out to Rolleston and now they've just announced their sixth education centre opening up there and there's new pools there's new restaurants there’s new bars. One of the developers up out there is Robyn Hughes. So he did he did a development residential development or still is called Farringdon which is really cool.

So lots of common areas lots of wide streets really nice community feel. He also did an industrial park called the I — zone industrial park just on the other side of Rolleston And it's gone ballistic.

So I had one of my clients sort of alluded me to a long time ago. She contacted me she works for a major firm. Im sure I can say this the warehouse. And she contacted me to buy an investment property out there because she knew how much the warehouse was going to put infrastructure there. They were going to have a new factory out there how many more jobs are going to come and that rental property has turned into three for her and another five for staff members there are the staff members there because they all see the the amount of growth now.

There's also a new one being built. It's called Eye porch and this is by Phillip Carter whose local rich lister Phillip Carter a very successful man. He's investing something like 500 million dollars out there.

And so when you think when you think about you know the fact that someone someone smarter than me is investing five hundred million dollars out there and then night Ngai Tahu who one of the local tribes who development company as well they do amazing development. They've bought some land out there. Let's just say they do the same thing again. That could be a billion dollars or more going into Rolleston and in the next five to 10 years if if you don't think that will come with new jobs you crazy the the Eye port it will have a direct connection to the Lyttleton port which which of course is great from a logistical standpoint.

And so all of this amounts to an increased population growth and Infometrix. Gareth Morgan's old company who study numbers there are a like a bunch of nerds like Ed I'm setting numbers and they they ranked Rolleston or that area as the third highest population growth in all of the country and this is out to 2023 and I think stats NZ since it goes out to 2040 it supports that kind of number as well.

ED [00:04:35]

Let me just jump in there because I've got a lot of stats are under Rolleston as well. So just to put some context around that extraordinary population growth that that has happened out in Rolleston back in 2003 it was a sleepy little township had about 3000 people living there now coming up to July 2016 that grew to about 14000 or about thirteen point three thousand.

So you've had an extra 10000 people move there in the space of of of about 13 years. Now that's a rate of at 12 percent per year population increase. So you're seeing a lot of people move out there and that is expected to grow by 2025 to about 18000.

So in terms of absolute numbers you know we're talking about growth of 15000 people. And so it's not a lot in terms of of absolute numbers but in terms of proportional growth it's it's enormous. And as Andrew identify one of the one of the fastest growing. Now the reason that even though those numbers might seem small it's important is because Rolleston now has grown to be about a third of the population of Selwyn district and that's important because Selwyn district is the fastest growing district in the country.

So over the last five years I think it was 2016 Selwyn district grew in terms of GDP by six point six percent. That's the highest of any district in the country. So you're seeing a lot of jobs out there a lot of population growth in here. And the other thing that's important as well is that median household income which has this is this is such an important measure to track if you're a property investor. As median household income.

And that's important because as well as saying Are there more people moving to this area. I'm going to invest in and who are going to buy houses. You've got a question. Can they afford higher house prices and in the case of Rolleston it's absolutely because of the 246 areas that I looked at and studied and the Canterbury region each of the five area Rolleston of relevance actually made up of five areas each of them were in the top twenty eight of 246 for median household income.

And Rolleston Southwest has the fourth highest median household income which is one hundred and 108 odd thousand dollars. So it's the fourth highest in all of Canterbury. So you've got a lot of people moving there.

These people have money and there's a lot of jobs that are happening out there. Now having said that at the same time it's important to note that over the last kind of 20 odd years between the year 2000 and 2008 we've only seen Rolleston House prices increase by about 4 percent per year which is about in the middle for for all of Canterbury.

And, and the Selwyn district now I imagine the reason because of that is because you have had such so many houses being built out there that you've had a lot of a lot of supply that keeps up with that population growth.

So while you might not see you might see slightly lower capital growth while that's happened is only so so much the city that township can grow before we start to say supply issues and I see etching to say something there Andrew.

ANDREW [00:07:55]

I don't know. I was just listening and then going to cut you off when I wanted to talk more about affordability. It's just that one thing that I just wanted to talk about before we wrapped up is just the affordability side of things so one.

One key factor I think to a successful portfolio is buying properties that are affordable. Now I took some property packs to an Auckland developer to show them an example of what we were put together for some of their stock.

And and as I was showing this lady who was a sales manager for a large building firm there she was kind of looking and staring at the pictures and I sort of wonder what she was what she was thinking she said this isn't this is just a mocked up pack right. No no no.

This is this is a real package and she said well five hundred thousand dollars you can buy like a four bedroom house on like 450 square metres. Yeah she's went silent. She can't take this home next day brought it. So we we forget I think in Christchurch because things are so affordable that actually compared to the rest of the country if I took a Rolleston House and put it in Wellington probably pay 750 I took it in Queenstown you probably pay eight fifty nine hundred.

If I take it to Auckland as a million dollars. So I think over the coming years I expect to see some of those prices catch up to the rest of the country. They won't be they won't give a million dollar house of Rolleston necessarily but not right are you willing. Yeah. Yeah but not right away. But but it's important to remember we are kind of undervalued there and I think there's some good room for.

ED [00:09:27]

Growth is and even if you compare Rolleston to the second largest second largest township ice and the Selwyn district which is Lincoln the median house price in Lincoln has about fifty thousand dollars higher. So if you are say you have limited usable equity in your in your owner occupier home and you're going to use that to buy an investment property then it is about affordability it's about actually buying something rather than than doing nothing.

So that's where Rolleston can be really good as well. But I see that you are looking at my timer Andrew so I better bring and that out from music but hey just before I do I do want to say don't forget to rate review and subscribe to this podcast and if you do want to learn about property in person with Andrew and I do come along to one of our live seminars which we are holding around the country in October 2019.

Now these are free property investment and first home buying seminars and these are going to be in Auckland Christchurch Wellington Queenstown most Christchurch which is actually completely full at the moment but it's OK. But if you're interested go to OPES partners OPES partners to register for your free. Ticket. buy. Rolleston Hey thanks for listening to the property academy podcast. Im Ed McKnight and I'm Andrew Nicol and we're gonna be back again tomorrow with more daily strategies tactics advice about how you can get the most out of the New Zealand property market until next time.