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Buyers seek out value in buoyant regions

Some of New Zealand’s most affordable cities and towns are topping the table with double-digit house price growth as they are targeted by bargain-seeking first-home buyers and investors.

While calm prevails in the Auckland and Christchurch housing markets, eight centres topped 10 percent growth in average home values in the year to 1 April, according to the CoreLogic QV House Price Index, led by Palmerston North whose values soared by 13.6 percent, to $435,696.

In second place, Dunedin continued its stellar run with annual price growth of 13.3 percent to an average of $451,199, closely followed by Rotorua (up 12.6%, to $472,566), and Hastings (up 12.1%, to $512,277).

Four other provincial centres – Napier, Whanganui, Gisborne and Invercargill – rounded out the double-digit club, with annual value growth of between 11 and 12 percent.

The latter three cities remain among the most modestly-priced local property markets nationally. Even after their strong run of price gains over the past year, average values in Whanganui ($271,100), Invercargill ($290,571) and Gisborne ($340,288) are still only between a quarter and a third of Auckland’s average of $1,039,917.

Among the North Island’s main centres, Wellington is the fastest riser with 8.4 percent annual growth lifting the average value to $702,896. Within the region, and matching the national ‘catch-up’ theme, the more affordable Upper Hutt grew much faster at 12.3 percent, taking the average value of a home there to $542,000.

Despite the large increases, CoreLogic says price growth generally has shown some moderation in recent months. Head of research Nick Goodall says the current market environment holds some ‘intrigue’. A change of stance by the Reserve Bank has made a cut in the Official Cash Rate more likely, offering mortgage-payers more certainty that interest payments will stay low for longer.

The market will also have a close eye on the impact of proposed tax changes.

Average value Annual change
Palmerston North $435,696 13.6%
Dunedin $451,199 13.3%
Rotorua $472,566 12.6%
Hastings $512,277 12.1%
Whanganui $271,100 11.8%
Napier $554,560 11.5%
Gisborne $340,288 11.2%
Invercargill $290,571 11.0%
Nelson $616,634 8.9%
Wellington $702,896 8.4%
Queenstown $1,200,185 7.1%
Kapiti Coast $586,842 6.8%
Whangarei $545,988 5.5%
New Plymouth $461,516 4.6%
Hamilton $580,285 4.5%
Tauranga $733,102 3.7%
Christchurch $497,298 0.6%
Auckland $1,039,917 -1.5%
Source: CoreLogic QV House Price Index

Bayleys national residential and auction manager Daniel Coulson says the latest figures reinforce the picture of a two-speed New Zealand market whose dynamics have reversed over the past three years.

“What we’re seeing is a bit of catch up in a number of our more affordable centres. Towns and cities whose residential property markets were relatively quiet over the years when Auckland values climbed rapidly now find themselves at price levels which are highly attractive compared with those in the now-stable Super City.

“Purchasers are zeroing in on places which remain relatively affordable, and mostly that’s provincial towns and cities where the buyer’s dollar goes a lot further,” says Coulson.

“This is giving these markets a new lease of life – and the signs are that, even though some of these locations have already seen significant value gains, this phenomenon still has some way to run.”

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