Continuingdouble-digit jumps in house values for Napier and Hastings brings different forecasts from Hawke's Bay real estate agency bosses.

Some ignore the principal of supply and demand in their analysis of the market but all agree now is a good time to sell.

Auckland's soaring market has made headlines around the world, with house prices doubling over 10 years.

Traditionally regional values followed main centres by about six months but Auckland's volcanic rise left Hawke's Bay cold until the past year when it has started to boil.


Ray White Hawke's Bay managing director Elanor MacDonald says there is no bubble in Hawke's Bay.

The market was in catch-up mode "after being completely stagnant for seven years".
"We have actually underperformed," she said.

Auckland's market slowed down last month because of a lack of houses to buy and there was "plenty of pent-up demand".

"As new housing comes on you can rest assured that market will pick up again. I would just about eat my hat if they saw a price decrease in the next five years."

Hawke's Bay also had latent demand, which had cooled as prices rose.

"Buyers will walk away once it gets to a certain price - they just won't pay like they were six months ago.

"Until we see some new houses - quite a substantial amount of new builds are under way in Hawke's Bay - the market will remain much as it is now, just creeping up its path.

"There are still plenty of buyers there, they are just getting frustrated there is nothing to buy. I think it's restraining the market somewhat. We had an open home in Onekawa on the weekend and 19 groups through - first open home - that is pretty huge numbers for Hawke's Bay on a very average property."

Property Brokers Hawke's Bay manager Paul Whitaker said the Hawke's Bay market was simply following the rest of the country in a buying binge fuelled by low interest rates and he doubted strong local growth would last past Christmas.

He said Auckland's rise was the main reason for a strong local market.

"Once you put pressure on your biggest centre it filters down. In Hawke's Bay over the last two years we have seen one in eight properties sell to Aucklanders."

The coming general elections made investors, who represented 30 per cent of the Hawke's Bay market, nervous. In Auckland they were 40 per cent of the market.

Tremain Real Estate managing director Simon Tremain said the Hawke's Bay median price, about $375,000, made the region attractive.

"In the big centres, with a shortage of housing especially, people are now seriously looking at other options."

A strong Hawke's Bay economy was removing barriers, as was the increasing number of flights to Auckland and the trend to remote working.

This week Air New Zealand announced greater capacity on its Auckland route.

Mr Tremain said the Hawke's Bay market "definitely has got a lot more legs" and would not plateau as the Auckland market has recently.

"I don't think we will see a stall this side of Christmas, that's for sure."

Cox Partners managing director Malcolm Cox said Auckland was bearing the brunt of a recent slowdown in housing activity but regions like Hawke's Bay were playing catch-up - the current gap between larger city house prices and the rest of the country was "extreme".

"If the 2005 to 2007 experience is repeated, people and capital will naturally flow to regions where values look more attractive."

The catch up had a headwind, however. The Reserve Bank required investor mortgages to have a 40 per cent deposit and owner occupiers required 20 per cent.

"On top of these restrictions, tighter lending criteria means the number of purchasers obtaining mortgages in 2017 has fallen 24 per cent New Zealand-wide."

He said interest rates, after bottoming out in the middle of last year, were now slightly higher which meant people could borrow less.

The typical winter lull may be extended by the uncertainty before the general election".

"These constraints tend to impact demand first, and as the number of sales ease, values stabilise. These influences are also affecting in the Hawke's Bay market.

"Despite this, there is still some support for prices to remain firm in Hawke's Bay as population growth remains steady and the fundamental mismatch between the supply of homes for sale and strong demand from buyers continues.

"Our expectation is not that values will drop, but rather the rate of increase will be slower."