Provincial New Zealand must be scratching its head at the endless headlines of soaring Auckland prices. When will they level off, when will they really start to filter through beyond the Bombays and Waiwera hills? Interesting questions, and no certain answers.
Considering the fragile economic state of New Zealand and the rest of the world, the latest national housing statistics paint a reasonably robust picture.
Overall sales have been consistently above 6000 a month this year (not that flash compared to some of the 10,000-plus monthly figures during the boom, but 40-50 per cent above the 2008 lows) and at the end of October prices were 1.1 per cent beyond the boom highs.
But this is a tale of two cities... and the rest.
Because of their size and heightened activity, our two biggest cities share a weighting in the national statistics which skews the picture. Overall, the country has come off its lows, but outside the specific supply-and-demand issues in Auckland and the post-quake pressures on Christchurch, prices are flat, drifting or edging up very slowly at best.
That big-city skew translates to this negative picture since the 2007 peaks: Whangarei (-18.4 per cent), Hamilton (-8.7 per cent), Taupo district (-14.6 per cent), Tauranga district (-9.9 per cent), Rotorua district (-12.5 per cent), Hastings district (-7 per cent), Napier (-7.2 per cent), New Plymouth district (-3.2 per cent), Wanganui district (-13.7 per cent), Palmerston North (-6.5 per cent), Wellington (-4.2 per cent).
Throw in some of the provincial towns where jobs are impossible to find and the picture is depressing... like Kaikohe (down 36 per cent since the highs), Turangi (down 30 per cent), Kaitaia (down 24 per cent) and Taumarunui (down 21 per cent).
Except for a handful of Wellington suburbs, everywhere in the North Island outside Auckland is below November 2007 values, and 20 per cent of the Queen City's suburbs are also in negative territory.
In price terms, that's five years going backwards - a period where inflation has devoured 14 per cent of purchasing power on top of the dropped values.
It also seems far from over. In an environment of super-low interest rates, demand in many provincial cities and towns is measly, with buyers looking for bargains. It will hardly get better next year when those rates start to rise.
But in Auckland, where an expanding population and lack of new building has merged with low interest rates and cash- flush banks to stir a sellers' market, when will it slow down?
Take out the old Rodney district (ranging from tentative Wellsford to more solid Orewa and Red Beach) and the struggling southern suburbs through Papakura and Franklin and the rest are looking uniformly strong.
Manukau is up overall 6.1 per cent above the 2007 highs, though some of its blue-collar suburbs are still down, and North Shore (up 7.4 per cent) and central Auckland (up 12.5 per cent) are bounding along. Waitakere (up 4.2 per cent) is a little further back but bubbling away.
While it can be just a little spotty at times. A do-up bungalow in one suburb can sell well while a quality home in neighbouring area sits unwanted on the same auction list - the overall impression is of a lively market, at times punctuated with panic buying and inflated ideas of vendor value. The relentless headlines and news clips on a hot market are hardly helping to bring reasoned judgment to the business of buying and selling a house.
Some suburbs, especially in the city fringe, have achieved amazing price gains, with Grey Lynn, Pt Chevalier and Sandringham up 23-30 per cent over their 2007 peaks.
The last rating capital values were set in July last year, and the old Auckland City Council area shows the strongest impact of a sellers' market. Nine suburbs - Grey Lynn, Sandringham, Blockhouse Bay, Lynfield, Mt Albert, New Windsor, Pt England, Waterview and Westmere - averaged sales more than 18 per cent above CV in the September quarter.
And the big numbers are starting to turn up in divergent suburbs further away from Queen St. On the North Shore, average sales in Bayview and Northcote Pt for the September quarter were up on CVs by 19.3 per cent and 24.4 per cent respectively; in Manukau, selling prices in Pakuranga Heights were 19.2 per cent higher than CV and 18.4 per cent in Mangere Bridge; in Waitakere, recorded sales in Green Bay were 27.6 per cent higher than CV for the quarter.
So, in Auckland anyway, are we in a fresh boom - or a mere bubble with dangers of a leak?
It may come down to definition of a boom, but logic suggests there'll be nothing like the doubling of prices over the next five years as we managed between 2002 and 2007. There just isn't the breeding ground for a boom.
Sale volumes have dropped since the winter months, and at the moment are well down on the lively times of 2003-2007 when properties sold some months in an average 21 or 22 days; in 1996 the measure dropped as low as 17 and 18 days. The Auckland median so far this year has ranged between 29 and 38 days.
With the surge of the last year, Auckland prices are expensive on international measures compared to household income and our ability to pay the mortgage - much more expensive than they were in 2002. Booms don't sprout from the platform of over-valued houses, and prices can't keep relentless moving ahead of wage growth.
On top of that we now have the lowest interest rates in our history, which has driven the upturn, and the cycle ahead will be one of rising rates to surely dampen prices.
Then there's the dislocation between rents and prices. Rents are relatively low at the moment, steadily making renting more attractive and reducing potential demand from new-home buyers. For landlords in an economy of low wage- growth, this is a problem: they can't push up rents enough to give a decent yield and will come under further pressure when interest rates rise. It would seem to add up to a drop in demand for houses and a cushion on prices.
But that's not saying Auckland prices won't move further before interest rates rises have their impact. A bubble is certainly forming and people who bought a year or two ago will have no regrets.
Economist Rodney Dickens calls the present Auckland spurt "a reasonably decent cyclical upturn", but he thinks the stimulus of the low mortgage rates may be wearing off.
Dickens is not offering any crystal ball insight to the future, but it seems reasonable to imagine a slowing of increases over the next year, probably led by the suburbs that have moved most lately, and then a levelling off as higher interest rates kick in.
Kerry Stewart, QV's Auckland operations manager, also won't be drawn into where things go from here.
"It's very hard to predict, very difficult to know," he says. "But higher interest rates are the key. When they start to rise I wouldn't be surprised to see things quieten down and prices not go anywhere. That's not to suggest prices might fall back... but who really knows?"
In the last boom, investors took their money to the provinces when Auckland began to get out of reach, pushing prices across the cities and country towns. Many of them came unstuck when the economy turned and the global financial crisis hit, and there are no signs in 2012 of a similar pattern.
Hamilton has the best story to tell of the northern provincial cities and, while overall prices are still 8 per cent below the 2007 peak, it is no longer a buyers' market in the Garden City.
But it certainly isn't a sellers' market. QV's property index shows prices are up just 0.5 per cent in the three months to the end of October and 3.1 per cent over the past year.
"It's pretty much in equilibrium now," is how QV's Richard Allen puts it. "There's reasonable supply against reasonable buyer interest, and if it continues that will under-pin prices and may mean a continued gentle rise over time."
But he can't see big increases flowing from Auckland down State Highway One because the same supply-and-demand factors aren't replicated in Hamilton.
Outside investors could still add their fuel to the fire, but Allen wonders about that. "Things have got to get pretty hot on their own patch before they start looking around, and I'm not sure we're getting to that stage," he says.
Over the Kaimai Ranges to Tauranga, prices have been static over the past few months and are up just 2.2 per cent on average over the year - still 10 per cent below the highs of 2007.
Sales volumes have picked up a little over the past year, but QV's Paul Thomas says people are "very wary... pretty cautious" in the fragile local economy. Investors are staying away.
"Really, the low mortgage rates seem to be the only thing holding it all together and the question is: what happens when they start to rise?" he says.
Unlike Auckland, Tauranga has plenty of land handy to the CBD and that will keep pressure on prices, with developers anxious to move sections and offering good terms to spec builders.
Across at Mt Maunganui there's some interest in do-ups, but the apartment market remains stuck at levels 25 and 30 per cent below the peaks and is drawing no interest. In Rotorua, with high unemployment and a depressed local economy, there is no sign of a flow-on from the Auckland growth. Houses are selling in reasonable numbers, but prices are generally flat - drifting 0.8 per cent in the past year and leaving a decline of 12.5 per cent since 2007. Taupo is in a similar position, slipping a little in the past year and now 14.6 per cent down on the boom highs.
Rather than hanging in there, some Rotorua prices are still going backwards. The QV data in the centre pages of this edition measuring quarterly sales against 2011 capital values shows eight of the 14 city suburbs have dipped, with Fairy Springs, Kawaha Pt and Fordlands faring worst.
None of the Sulphur City suburbs has returned to the highs of five years ago and most are still behind by double-digit figures. Fordlands and Western Heights are more than 20 per cent below.
Susan Lock, from QV's Rotorua office, says investors attracted by high yields, low interest rates and competitive borrowing terms are still looking for bargains. While there have been sparks of activity "potential purchasers aren't falling over themselves to get into debt".
As elsewhere, the key issue is what happens when interest rates rise. If the market is flat or declining when mortgages are cheap, where does it go when rates begin to move?
Whangarei has similar problems to Rotorua, with tight employment and limited opportunity producing yet another quarter of drift. Measured to the end of October, prices were 18.4 per cent down on the 2007 peaks.
L. J. Hooker is the local big real estate agency player and principal Michael Springford says his company sold 68 properties in October, though lately it's been more like 40 a month (against the 80 sales at the top of the boom).
But prices are going nowhere, with even high rental yields struggling to draw much investor interest. A recent mortgagee auction returned $240,000 for a property earning weekly rent of $555 - a gross yield of more than 8 per cent.
Springford says there's very little interest above $380,000 or $400,000 and he has "fantastic" properties above that which are just sitting.
The average Auckland price is $530,000 and it will generally buy no more than a modest bungalow, certainly not in one of the fancied suburbs. In Whangarei, the same money will grab one of the city's better properties - a smart five-bedroom, three-bathroom family home with double garage on a decent section in a great location.
"I really see that gap in value as our future - asset-rich Aucklanders with few savings reaching retirement and moving north," says Springford. "Down there in two or three years, they'll be able to sell for $1.5 million and come up here to a better home and find close to a million dollars left over."
Now that's something you don't often find: a sister city enthusiastic at the prospect of getting more Jafas. Beyond Auckland's boundaries, times are certainly tough.