Lending restrictions felt as house prices rise

A109 Light Utility Helicopter flight with mayor Gisborne City from the air in November 2023.

Gisborne's house prices continue to rise faster than the national average but signs of a divided market are appearing.

Figures from Real Estate Institute New Zealand (REINZ) show median prices for residential property across New Zealand increased 20.5 percent — from $730,300 in January 2021 to $880,000 in January of this year.

For Gisborne, that rise was even higher — the median of $650,000 in January 2022 up 30 percent on January the previous year.

“Agents initially saw hesitation in the market as New Zealand entered the red traffic light setting, but this feeling has since passed,” REINZ regional director Neville Falconer said.

“Listings increased only slightly as people waited until after the holidays to make their decisions.

“A change in the mid-to-lower property price range selling at auction is evident due to lending restrictions impacting first-home buyers.

“Gisborne saw only 4.5 percent (one property) in the low-to-mid price range sold by auction in January this year in comparison to 33.3 percent (nine properties) in January 2021.

“Many expect the market to level out and the days spent on the market to increase across all price ranges in the following months.”

Changes to the Credit Contracts and Consumer Finance Act mean banks are tightening up on who they lend money to but Property Brokers Gisborne branch manager Stefan McNeely said initial impacts had been to deter buyers at the lower end of the market.

“We are seeing probably consistent activity in that $650,000 and above bracket. However, the lower-mid range bracket is struggling a little bit with the new finance regimes, for sure.

“There are not too many investors running around and there's definitely been a drop in the number of first-home buyers out there.”

Mr McNeely said it was still a good time to sell but people would need to adjust their expectations of time a property would remain on the market.

That would also highlight the importance of selecting the right agent to market properties and using more creative marketing methods, rather than “cookie cutter” online marketing programmes,

“I think we will start seeing a few changes where people have to start being a bit more creative about how they market their property.”

Bayley's Gisborne director Simon Bousfield said interest for property and activity in the auction room remained as strong as it had been in recent months.

“Some buyers are facing challenges with new lending restrictions.

“However, with the right guidance and time allowed leading in to a deadline sale, most are able to get the answers they need.

“Demand continues to exceed supply. More buyers competing continues to result in rising medians against those experienced in previous years.”