Hot Dunedin property market ignites in neighbouring towns

Dunedin’s residential property boom could soon be coming to a town near you.

As the city’s red-hot real estate market continues to smoulder, Quotable Value area manager Tim Gibson said increasing numbers of first-home buyers were beginning to look to the neighbouring towns of Waihola, Milton, Waikouaiti and Palmerston for more affordable housing.

“Dunedin’s residential property market is certainly on fire right now, stoked by record-low interest rates, high demand and a low volume of housing available for sale. Potential purchasers are finding it really tough to even get an offer considered here these days,” he said.

“As a result, we’re beginning to see significant growth in Dunedin’s fringe suburbs and towns as more first-home buyers are forced to venture further afield in search of greater value for money. I expect this trend to continue as we move in to 2021.”

A tidy three-bedroom home on a quarter-acre section in Milton recently sold for $400,000, while a modernised three-bedroom bungalow with elevated lake views sold for $461,500 in Waihola – roughly $100,000 less than Dunedin’s current average residential house value.

Meanwhile, a three-bedroom home on a quarter-acre section with two bathrooms, new decking and a garage recently sold for $355,000 in Palmerston.

“You do have to factor in your commuting time and costs, of course, but you certainly do get a lot more bang for your buck in these areas. I can see why that would appeal to a first-home buyer who wants to get on the property ladder but isn’t willing or able to spend more,” Mr Gibson said.

“If I was to pick just one of these towns with the most potential to grow it would be Palmerston. Commuting costs can be minimised by utilising public transport, it has good schooling facilities, a recently built medical centre, and it’s close to the Macraes gold mine, which is a major employer.”

Mr Gibson admitted that trying to predict the twists and turns of the property market was an exercise in futility – especially given the economic uncertainty surrounding Covid-19. Even so, he expected property prices to continue to push upward in 2021, albeit at a slower pace than they have for much of this year.

“Only time will tell how much steam the reintroduction of loan-to-value rations (LVRs) will take out of the property market. I suspect it will probably cool things down a little, but we’ll still be left with too much demand and not enough houses, and that should keep upward pressure on prices for the foreseeable future.”