"Auckland effect" leads to rising values in Hamilton, Tauranga and Hastings

Date: 14 July 2015

It appears that many Aucklanders are looking to capitalise on their equity by either selling up and moving to Hamilton, Tauranga and the Hawkes Bay or using their equity to purchase rental properties there.
“There are reports of large numbers of Aucklanders are flocking to buy property in Tauranga, Hamilton and the Western Bay of Plenty resulting in rising values in these centres,” said QV National spokesperson Andrea Rush. 
“As many of 60% of those attending open homes in Tauranga are reported to be Aucklanders, while around 15% of all buyers in the Hamilton market are now from Auckland,” she said. 
“There is also more interest from out of town buyers in the Hawkes Bay market and this is leading to value rises in Hastings but is yet to result in any significant value increases in Napier.”
The latest monthly QV House Price Index is reflecting this with a steepening of the index for the Tauranga and Hamilton markets and Tauranga values have finally topped the previous peak of 2007. 
That nationwide residential property values for June have increased 9.3% which is the fastest rate since February 2014.  This means they are now 25.6% above the previous market peak of late 2007. When adjusted for inflation the nationwide annual increase drops slightly to 9.2% and values are now 7.8% above the 2007 peak. 
“Values in the other mains centres including Wellington, Christchurch and Dunedin continue to rise at a slower, steady rate,” said Ms Rush.
“There is a severe shortage of properties listed for sale across all of the main centres and this creating a winter slowdown which is dampening activity in some areas while in other areas the lack of listings is leading to increased competition amongst buyers which is driving values up.”
“Sales volumes are higher than this time last year with high migration and the forecast of lower interest rates fuelling activity in the housing market in many parts of the country.”
“It appears the prospect of changes to the LVR deposits and tax of residential investment property may be creating some urgency amongst buyers wanting to purchase before the changes come in on October 1.”
June has seen a continuation of the strengthening market conditions across the Auckland region that have been experienced since late last year with values up 5.5% over the past three months and 17.0% year on year but the Auckland effect.
“QV homevalue Auckland Registered Valuer James Wilson says, “Although market activity levels remain buoyant, there is a severe shortage of properties listed for sale, increasing completion amongst buyers which is further adding to upward pressure on values.”
“High levels of speculation are evident across all segments of the market as well as increasing evidence of the land-banking of properties which may offer the potential to sub-divide under the Proposed Auckland Unitary Plan.”
The Hamilton market is still showing no signs of the traditional winter slowdown and demand remains high.  QV homevalue Hamilton Registered Valuer, Chris Price says, “There continues to be a shortage of listings on the market in Hamilton.
“More properties are selling at auctions and clearance rates via this method are increasing. Properties are also selling at a lower average number of days than usual for this time of the year.” 
“Around 15.0% of all sales in Hamilton are to Aucklanders who are either using the equity to buy investment properties or are selling up and moving here as they can get more bang for their buck.”
"There has also been significant demand and increasing property values across Tauranga and the Western Bay of Plenty over the past three months.” 
QV homevalue Tauranga Registered Valuer David Hume said, “Homes in Tauranga and Papamoa are now selling much more quickly than they have for several years and value levels are now considered to be at or above the 2007 peak.”
“There is very strong demand from out of town buyers with approximately 60% of all people at open homes now from Auckland.”
“This has created a degree of panic for local buyers not wanting to get priced out of the market with the $300,000 to $500,000 range is seeing the biggest demand, also fuelled by historically low interest rates.”
“A much higher proportion of properties are being sold at auction as real estate agents are struggling to correctly price properties.”
“In the Western Bay of Plenty, the market is strengthening, sales volumes are up across the board and buyers are coming from far and wide.”
QV homevalue Hawkes Bay, Registered Valuer Bevan Pickett said, “There is a shortage of good listings for sale on the market in the Napier and Hastings.”
“There are a lot of buyers looking for a property that fits their personal criteria but are finding thin pickings in terms of choice on the market.”
“The strength lies with the vendors in most cases and  multi offer situations are becoming more common.”
“We are now seeing more out of town buyers, many from Auckland, present in the market and some are willing to pay above local expectations for what the property is worth.”

Tags: QV.co.nz, The Auckland Effect, Property, CoreLogic NZ Ltd