Buyers priced out of the hot housing market in Hastings and Napier are heading to smaller towns in search of affordable houses.
Central Hawke’s Bay-based Property Brokers agent Matt Oliver says that while “city slickers” from Wellington and Auckland are heading to Hawke’s Bay’s bigger cities, locals are buying in the smaller town of Waipukurau. And that’s causing problems for first-home buyers in the town, where median house values have jumped 46% in the last 12 months to $550,000.
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“There are now gaps at the lower end, there’s nothing under $400,000 to $450,000 and the quality is really poor – the best ones all sell, and people who want to list won’t because they can’t get anywhere else. It’s a vicious cycle.” Oliver says he has one property listed at the moment for offers over $279,000, but “that will sell for more”.
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“We do ‘offers over’ campaigns, and that creates competitive interest, but you can have up to 10 multiple offers. The last few weeks we had a listing asking for offers over $420,000 that sold for $563,000 – we had 14 offers and half of those were for over $500,000.”
He said buyers were cashing up in the bigger towns and prepared to make the 25-to-35-minute commute to work, adding that while the rural service town was “not quite Greytown” in terms of its amenities or gentrification, he’d compare it to Carterton “it’s a great agricultural community.”
Oliver says his top sale this year, $1.5m for a five bedroom, three-bathroom new architect-designed house was great buying for the quality of the property compared to the coastal Hawkes Bay towns.
A generous three-bedroom house on a 1798 sqm site in Waipukurau, Central Hawkes Bay, is asking for offers over $595,000. Photo / Supplied
He says that investor interest is still strong in the town, and says there were no signs they were quitting their properties when the Government tax changes were announced in March.
However fellow Property Brokers agent Sue Walters who covers Havelock North says that the lower end of the market, investors and first home buyers, had slowed down there.
“There’s plenty of cash around, we’ve found $1m and $900,000 properties are moving very quickly. But we’d have two or three offers, not the ten or more we had in February or March.
A three-bed first home buyer or investment property in Waipawa, 30 minutes out of Hastings, expects offers over $425,000. Photo / Supplied
“It’s still too early to tell for this year, but [before Covid] we’d not had that normal winter drop and spring rush for three years, it’s just kept going all year. There are not enough listings and we’re still short of stock.
Property Brokers managing director Guy Mordaunt says that the changes in the Government’s investor regulations had an impact across most of the company’s regional offices.
“Volume is down, but it has been masked by prices going up and up. First home buyers haven’t pulled out, but it has slowed - in Palmerston North prices went up 10 % just in January and February.
“We manage 6500 rental properties around the country. The big institutional investors – those with say 30 properties – have cashed up five or so to help cash flow, but the mum and dad investors claiming that interest was a big perk to make their investment work. When the announcement came out, we had 14 come to the market in Hastings, mostly the mum and dads.
“It's not a big panic, but it is people dropping out.”
That said, Mordaunt says buys of under $500,000 are still possible “in the Dannevirke’s of this world” but have shot past that in fast growth cities like Wanganui.
“Six years ago, a very nice place in town was $350,000. Two years ago it was probably $600,000, now it’s $1m. It’s just gone up and up.”
Like Oliver, Mordaunt is seeing the growth spill out of the major cities to the feeder towns across the country – Ashhurst and Fielding, for example, on the fringes of Palmerston North. A property in Rangiora,, 30 minutes out of Christchurch, recently sold for $901,000 - $311,000 above its 2019 rating valuation.
“Even in Westport and Greymouth, prices are going up. There are lots of investors in places like that, as there’s a huge demand for rental property.”
He points the finger for property shortages in the provinces at councils caught un-prepared for the population growth (“in 2000 nobody thought of population growth, everyone thought the regions would die”) and without the infrastructure to open up new land for building.
Mordaunt, who is leading the Property Brokers national conference this week says that his team's focus is on service.
“This is a horrible time to buy a house, it’s stressful. Selling is okay, but buyers have been more stressed than they’ve ever been. It all comes back to not enough stock, but we need to have repeat buyers so we have clients for life.”
May figures from the Real Estate Institute of New Zealand bear that out, with properties in the regions selling the fastest in the country: homes in Taranaki are selling in just 24 days, 26 days in Manawatu/Wanganui – the fastest May sales times since records began.
And while nationally at 15,000 the number of properties for sale is the lowest it has ever been at 29% down on last year, stocks are even lower in the provinces: Bay of Plenty stock levels are down 47%, Nelson down 46%, West Coast down 44% and Canterbury down 43%.
“It creates uncertainty if there's nothing on the market, people are saying ‘where am I going to go’?,” says Mordaunt.
