'Tidal wave of Aucklanders' set to drive up house prices

By John Cousins

LIVING THE LIFESTYLE: Stan and Bette English have settled quickly into Papamoa.
LIVING THE LIFESTYLE: Stan and Bette English have settled quickly into Papamoa.

A tidal wave of cashed-up retired Aucklanders will help drive up property prices in Mount Maunganui and Papamoa, a leading city real estate agent has predicted.

John O'Donnell, who owns LJ Hooker's branch in the Mount and Papamoa, was commenting on what the future held for the area in 2014 after another strong month of building consent activity by the city council.

The 152 consents received by the council last month was nearly 60 per cent higher than the previous December. Confidence-boosting figures were also disclosed by the value of consents issued for new homes - up $3.5 million to $18.7 million.

However, the biggest cash performer was the commercial sector where the value of consents issued by the council nearly tripled to $29 million, led by $16.8 million of construction approved for stage 3 and 4 of the radiotherapy clinic being built at Tauranga Hospital.

Mr O'Donnell said half of the people coming through their doors were baby boomers aged over 60. They were people taking their life's savings out of Auckland and building or buying in the Mount and Papamoa.

"It is the start of a tidal wave of people coming out of Auckland."

New arrivals were helping to drive the biggest surge in building along the coast for five to six years. Pensioners were selling in Auckland for a lot of money, buying brand new house and land packages for $450,000 in Papamoa and ending up with at least $200,000 in the bank. He was also seeing more activity at the northern end of the Mount where people were buying $800,000 sections and building million-dollar homes.

The market for established homes was also starting to take off along the coast because there was little on the market.

"We are struggling to find properties to sell and there is a significant number of buyers. Supply and demand is what it is all about, so prices have to go up."

Harcourts Advantage Realty managing director Simon Martin said all the economic indicators were looking positive, including building consents. "If people are confident, it bodes well for the future." He believed the buoyancy in the market would balance out the impact of interest rate rises.

Mr Martin said there was no shortage of listings on the Tauranga side of the city.

A big part of the market were buyers coming from a two-hour drive radius of Tauranga, including other parts of the Bay of Plenty and the Waikato. There was more of a focus at the moment on Auckland's market because of the way Aucklanders could buy equivalent or better properties in Tauranga for much less than they were selling their homes.

Mr Martin said there would be an upward pressure on prices in Tauranga if the listings did not increase. At the moment, about 10 per cent of listed properties were selling each month and that would need to increase to 15 per cent or more to see upward pressure on prices.

Peter Cooney, whose company Classic Homes does a lot of Papamoa packages, said he was expecting another strong year if the rest of the economy stayed positive. However, interest rate increases would keep things in check. "Interest rates have a huge bearing on house building. Every time they go up, someone else can't afford the 10 per cent deposit for a new home."

- BAY OF PLENTY TIMES

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