West Coast property prices experiencing “unprecedented” growth
West Coast property prices are rising faster than anywhere else on the South Island.
According to the latest QV House Price Index, average residential property prices in the Buller, Grey, and Westland districts have increased by 23.9%, 14.1% and 18.7% respectively over the past 12 months – an “unprecedented” amount of growth, according to QV area manager Kris Rodgers.
“Like all of NZ, the West Coast is experiencing a significant drop in visitor numbers that may take years to recover from, and yet its residential property market is experiencing an unprecedented amount of growth and so far it’s showing no signs of slowing down.”
It comes after New Zealand’s last census in 2018 showed the west coast was the only region in the country with a declining population.
“The West Coast’s population may be falling, but its property prices are currently doing anything but. If the region’s residential property market is any indication of population growth, then it looks as though the decline has stabilised at the very least,” said Mr Rodgers.
“Multi offer situations are common and there are reports of numerous sales to out-of-town buyers purchasing properties sight unseen. We’ve also heard that significant numbers of expat Coasters have been returning to the region after years away in Nelson, Christchurch, and further afield.”
Fuelling the West Coast’s growing property prices is record-low interest rates, a shortage of quality housing stock, and strong demand from buyers – all conditions that Mr Rodgers said could be with us for some time yet.
However, the reintroduction of loan-to-value ratios (LVRs) from 1 March could help cool the residential property market down. Property investors are now required to stump up a 30% deposit for a house, while owner-occupier buyers require 20%. From 1 May, it will increase to 40% for investors.
In both Westland and Buller, the QV Quartile Index – which tracks and measures activity at the upper and lower ends of the residential property market – indicates that property prices at the lower end of the market are increasing at a greater rate, while the opposite is true in the Grey District, where the upper quartile is showing greater growth.
“This indicates that first-home buyers and investors are the ones largely driving property prices up in Westland and Buller. These are the people who will most be affected by the LVRs, so it will be interesting to see whether things cool down there first as investors reach their credit limits and first-home buyers struggle to raise a big enough deposit,” said Mr Rodgers.
“We may not know for several months whether the reintroduction of LVRs will have its intended effect. In the meantime, the West Coast remains a sellers’ market.”