Rates hike puts buyers on alert

By Sam Hurley, Lydia Anderson

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Hastings couple Erika and Clint Andrews, pictured in front of their rental property, recently bought their first home. Photo/Warren Buckland
Hastings couple Erika and Clint Andrews, pictured in front of their rental property, recently bought their first home. Photo/Warren Buckland

Hawke's Bay homebuyers are trying to secure properties ahead of a forecast hike in interest rates - which could slow a heated market, industry insiders say.

The latest QV New Zealand Herald Property Report shows the average house sale price in Napier rose 1 per cent in the three months to December to $325,275, while Hastings District dropped 0.5 per cent to $300,730.

The cheapest area to buy a house across the region for the quarter ending November 30 was Maraenui, with a median house price of $166,000. The most expensive area was Hospital Hill at $419,000.

Hastings couple Erika and Clint Andrews recently bought their first home in Mayfair and said it was "very scary" after renting for nearly 10 years.

"We were looking for something that didn't need much work," said Mrs Andrews. "Something with a tidy inside, relatively newish kitchen and bathroom."

She said the process of looking for the pair's first home was, at times, daunting while the feeling there was a lot of risk attached was ever-present in their minds.

"We moved into the the place we are renting now about two years ago, specifically to start saving for our first home and the landlord was very understanding of that fact.

"It's really important that there is support for first-home buyers - we had goals as a couple and one was to buy a house but it can be quite difficult and a steep learning curve because you don't really know what your doing or what the prices are, or should be."

She said the advice the pair received from Mortgage Link adviser Judy Steiner was invaluable when they were searching for a home and attending auctions, after initially running into a variety of obstacles when first beginning their hunt for a house.

The country's most expensive suburbs were all in Auckland, with average prices ranging between $1.2 million and $2 million for a property on the city centre fringe.

And though the nation's property prices has been steadily climbing, a likely 0.25 per cent rise in interest rates tomorrow is expected to lump more costs on mortgage holders and could slow the heated housing market, experts warn.

Harcourts Hawke's Bay managing director Kaine Wilson said February was one of the better months his company had seen for several years, coming off the back of an equally good January.

That was partly due to lower market activity at the end of last year, he said.

In Maraenui, buyers could expect to find a classic weatherboard or stucco three-bedroom home with a garage for the suburb's median price.

"Maraenui in particular would [there would] be a lot of investors and a few first-home buyers."

By contrast, Hospital Hill contained older villas which attracted first and second home buyers with substantial income thresholds.

The forecast rising interest rates could create more sales across the region as people looked to buy before rates jumped even higher, he said.

"The mere fact ... there's been talk in this first quarter [of] rises on the horizon has created activity in itself."

Meanwhile, new monthly figures from the Real Estate Institute of New Zealand show the median house price for Hawke's Bay jumped 10.9 per cent during February to $305,000 - up 7.3 per cent from the same month last year. Napier recorded a median price of $340,000 and Hastings $285,000.

The number of sales rose 2.6 per cent across the Bay to 194 last month - but recorded a 9.3 per cent year-on-year fall.

Last month, 6125 dwellings sold nationwide, down 7.6 per cent on last February.

National median prices rose $33,000 to $415,000 compared to last February and were up $13,000 or 3.2 per cent on January this year.

REINZ chief executive Helen O'Sullivan said it was hard to predict what impact rising interest rates would have on provincial regions, as there was no "rough rule of thumb".

However, rising rates combined with the Reserve Bank's recent restrictions on low deposit home loan lending could put a "significant handbrake" on sales as vendors put off selling until they could get a good price.

Ms O'Sullivan said Hawke's Bay continued to experience a shortage of listings, "which is helping to drive higher attendances at open homes and quick sales for properties that are well priced".

- HAWKES BAY TODAY

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