The new hot spots

As the Auckland market cools, would-be buyers look elsewhere

Auckland’s market has cooled but the heat has switched to other regions, where prices are soaring.

The latest QV Property Report shows many buyers have been priced out of the city and are looking elsewhere.

While Auckland prices have stalled in the past three months, Napier is up 5.7 per cent and Whanganui has risen 4 per cent.

Heat from Auckland’s previously red-hot market is now being seen in other regions, where prices are soaring.

New figures show house prices in the country’s biggest city have settled at an estimated median value of $1.04 million — zero growth across the wider region in the quarter to the end of July.

The latest QV Property Report, out today, shows the growth seen in Auckland in recent years has abated and even dropped in certain centres — although as detailed in the Herald on Sunday prices remain at levels almost double those of 10 years ago in most places.

QV national spokeswoman Andrea Rush said the cost of a home in main centres such as Auckland had now priced many buyers out of the cities and they looked to the regions as an alternative.

“Also, given that properties are much more affordable in the regions, the LVR restrictions and bank lending restrictions do not impact as much in terms of a lower level of finance and deposit needed.”

The “rekindled demand” in the regions had driven the growth in regional prices, she said.

The QV report showed Napier City was leading North Island regional areas — up $24,252 (5.7 per cent) to an estimated median of $449,717 in the three months to the end of July.

Whanganui was close on its heels, up $8814 (4 per cent) in the same three-month period to $229,167. Whangarei climbed 3.4 per cent to $494,212.

Across the year to the end of July many of the regions experienced double-digit percentage growth.

Prices in the Hastings district rose $70,625 (20 per cent) in the past 12 months to $423,750.

By comparison, the five Auckland regions saw only 3.7 to 6.1 per cent growth across the same year.

Auckland City had the largest growth, up $70,990 (6.1 per cent) to $1.23m. The North Shore had the slowest rate, up $42,903 (3.7 per cent) to $1.20m.

The estimated median values, collated by CoreLogic, were reached by calculating a weighted average for the suburb according to the estimated market value of each property.

Harcourts CEO Chris Kennedy said that despite comments the market was slowing, the figures showed it had only slowed “ever so slightly”.

“It’s still a solid market, still going really well.”

The borrowing restrictions had played a part in cooling down Auckland’s prices, Kennedy said, which was reflected in the growth in value in the regional centres.

“There’s a whole lot of hoops that people now have to jump through. It’s all had an impact in Auckland, but there is still a ripple effect of high values running down through the country.”

He used Dunedin as an example where prices had gone up.

Trade Me head of property Nigel Jeffries said the tighter restrictions on getting a mortgage and high prices had made it harder for many to buy in the main centres.

“I think we have hit an affordability and lifestyle point where owners either cannot take on the bigger mortgage or choose not to take it on.”

The election could also be having a dampening effect in the market.

“The looming uncertainty . . . is playing a part as buyers and sellers wait for the election results before making a move.”

Despite calls to loosen the LVR as sales began to drop off significantly, Jeffries said the most important thing was to ensure the country had “ro- bust and well-capitalised lenders”.

“If the LVRs are what we need to achieve this, then the pain it inflicts on us is worth it.”

A more “granular management” of the LVR was another option that could see restrictions based more on level of risk of the loan and the overall bank portfolio risk, he said.

It was only a matter of time before the restrictions also had an effect on the regions, Jeffries said.

“From a cyclical perspective, the growth in the regions is to be expected as it normally follows growth in the main metros.

“Given the very high regional growth rates, we wouldn’t expect these to be repeated for much longer as the markets will be approaching their own affordability thresholds.”

The looming uncertainty . . . is playing a part as buyers and sellers wait for the election results. Nigel Jeffries, Trade Me