Napier real estate market picks up

The Napier real estate market ended 2014 looking to shake off the effects of the loan-to-value restrictions that have been in place since October 2013, and significantly affected turnover in Hawkes Bay and other provincial areas.

Since October 2014 house sales recovered strongly across the country, except in Hawke’s Bay and Central Otago Lakes, where there has been no noticeable increase in sales up to and including January 2015.

It is important to remember that sales volumes around much of the country are not particularly high when compared with their historic averages, which means increases that are being reported are being calculated from a relatively low base.

In Hawkes Bay turnover during the past year has been tracking 19% below the average for the past decade.
There is scope for activity in Hawkes Bay to improve if positive market conditions remain.

Mortgage rates have retreated since September last year and there are signs of above-average population growth. Combined with sound economic performance, these factors may already be contributing to a boost in demand which we have observed during February.

But be aware that strong turnover in a single month DOES NOT signal the start of “a boom”, which Hawkes Bay Today has enthusiastically attributed to one local agent in a recent headline.

As house buyers get ‘back in the game’ this is creating a shortage of property in some price sectors notably $400,000 – $600,000 and this may also lead to a moderate pick-up in house price growth in this sector.
One of the biggest constraints to significant price increases in Hawkes Bay is the affordability of housing compared to incomes. This contributes most to moderate forecasts for price growth in this region.

House sales in the price sector below $350,000 – where turnover is down a massive 34% on last year – is expected to receive a boost when changes to the KiwiSaver First Home Buyer packages come into effect from 1 April 2015.
With the Auckland housing market regaining momentum, it now appears that the Reserve Bank will not have scope to ease or remove LVR restrictions this year.

In fact, the Bank is openly considering the introduction of additional lending restrictions aimed at property investors, forcing banks to increase the cost of lending to people owning 5 or more properties. If this occurs it is likely to further moderate house price inflation.

For more information on the local property market contact Malcolm Cox on