Hawke's Bay market 'self-corrects'

By Sam Hurley

It has been a recovery year for Napier and Hastings suburbs which witnessed house prices plummet during the recession, as median prices throughout most of the region increased and "self corrected", according to a Hawke's Bay market overview report.

Andrew White, director of property valuation company My Vauler, which produced the report for Hawke's Bay Today, said the suburbs that had the largest decrease when the market flattened out have "gone through significant corrections" in the past year.

The biggest mover in the region proved to be Maraenui up 35.46 per cent from a median sale price of $125,000 in 2012 to $170,000 in 2013.

"Maraenui saw a decline from 2009 and a significant decline in 2012 - this was mostly due to a lack of demand after the 'boom' period," said Mr White.

Other suburbs to show significant change include Flaxmere, which is up 26.43 per cent from a median sale price of $140,000 in 2012 to $177,000 in 2013.

"The market is showing some strength on the back of overall economic and consumer confidence," said Mr White.

"Some pressure is coming on buyers, particularly from property investors who started re-entering the market at a slow pace in 2011 and have been more active in 2012-2013.

"Market volatility, as measured by fluctuations greater than 10 per cent in median prices, has reduced significantly in the first half of 2013. Most suburbs in Hawke,s Bay are experiencing a less than 10 per cent median price movement so far this year"

"Agents are commenting that buyers are continuing to be particularly tough on the sellers, with many putting in just a single offer, giving no opportunity for the seller to counter offer. It is proving more difficult for agents to bridge the gap, particularly as sellers expectations start to grow with the strengthening market."

However, this latest report comes against the backdrop of an international study released last month that showed that New Zealand had the fourth-most overvalued property prices in the developed world.

The study, by the Organisation for Economic Co-operation and Development, showed that house prices nationally were overvalued by 61 per cent compared to rents and were 23 per cent too high against incomes.

The OECD research, which compared prices with local wages and rents, found that only Belgium, Norway and Canada have more overvalued property than New Zealand, where the market is being driven by Auckland's booming residential market. New Zealand was in the category of countries where houses appeared overvalued yet prices were still rising.

Reacting to the My Valuer report, Cox Partners Estate Agents managing director Malcolm Cox said the price gains are now beginning to show in provincial areas including Hawkes Bay. However, there are still about seven months' supply of homes for sale.

"Across the country, apart from in Auckland, house prices are still lower than their 2007 peak. The median real decline is about 19 per cent, indicating that property still remains significantly cheaper than it was five to six years ago. He said prices were beginning to rise again but people should remember "this firming in prices comes from a very low base".

Elsewhere in the region Clive has seen a lift in 2013 of 21.35 per cent, a 10 year high, to show a median house price of $415,000, up from 2012 and 2011 levels.

Waipukurau, Waipawa, Dannevirke and Wairoa have, however, all seen negative growth this year.

Waipukurau, which had a lift of 13.77 per cent in 2012, had a decline of 9.81 per cent in the first six months of this year.

"We are yet to see if this is just an anomaly, or a significant correction in the Waipukurau market place," said Mr White.

While Wairoa saw good growth in 2010, 2013 has tracked the same way as 2011 and 2012 with negative growth of -10.20 per cent.

Havelock North has seen the largest volume of sales for any suburb in Hawkes Bay with 154 sales recorded in the six months to the end of June 2013. The suburbs of Akina and Flaxmere Property market 'balanced'

have also been very active, with 45 and 41 sales respectively.

The Havelock North median sale price has returned to 2009 levels.

"With strong demand continuing in the village, we expect the 2007 median price level of $448,000 won't be far away," said Mr White.

Parkvale in Hastings has seen its strongest movement in house price since 2005, recording a lift of 9.61 per cent this year. Parkvale saw significant price increases year on year of around 30 per cent in each of the years 2003 to 2005 and was fairly static through to 2011, when there was an 11.43 per cent decline in median sale price. Napier Hill has shown little price movement this year, 28 per cent of the sales were under $300,000 and 33 per cent of transactions over $500,000, with the balance of sales being in the price range of $300,000 to $500,000.

"Across the board, activity across the various price sectors on Napier Hill is very balanced, with steady demand in each price bracket," said Mr White. "At the current time, we are starting to see evidence of demand, with well presented and priced recent listing having multiple offers within the first week of being offered on the open market."

Hawke's Bay saw a combined value of $58M in property transactions in June 2013. The median sell price was above the median listing price in both Napier and Hastings with Napier 5.55 per cent above and Hastings 15.73 per cent above.

The highest recorded sale so far this year was in Hastings $1,300,000 for a lifestyle type property Havelock North, while the highest recorded sale for Napier was $1,060,000 for a modern home on a large site in Taradale.

- Hawkes Bay Today

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