Hawk'es Bay house price surge continues

House prices continue to grow.

Hawke's Bay house prices were up 19.1 per cent over the year to August, to a record $405,000 according to the REINZ Housing Price Index.

The $65,000 rise over the year is the third-highest percentage increase in the country and made building new homes an attractive proposition.

"I have never done as many valuations for construction purposes in my entire career," valuer Rob Douglas, of Added Valuation, said.

"The builders are absolutely frantic and construction costs are going up a lot.

"There is probably going to be some continuation of value growth going forward, because the fundamentals are there remains a shortage of properties - not just a shortage of properties for sale - and constructing them takes a lot of time. Until then people are prepared to pay to make sure they get a property."

He said the strongest growth was in the price bracket above $500,000.

REINZ figures show for the first half of this year there was a record 30 sales in the million-dollar bracket compared with 15 for the same period last year.

REINZ chief executive Bindi Norwell said the Hawke's Bay market would likely pick up going into summer. Inventory levels in Hawke's Bay remained low "which has seen vendors' pricing expectation increase by around 10 per cent".

"Buyers are not acting as quickly as they were previously and are taking their time to complete due diligence prior to making offers," she said.

"The market is a bit slow with the election just around the corner, but it should pick up in the next few months."

The median price was up $5000 from July, with prices rising 83 per cent in Wairoa on low volumes but falling 7 per cent in Central Hawke's Bay.

Regional sales volumes fell 6 per cent from a year ago, the smallest drop of all regions except for the West Coast, with sales rising 12 per cent in Napier but falling 22 per cent in Hastings and 18 per cent in Wairoa.

Compared with July the number of sales increased 8 per cent in August, with sales rising 28 per cent in Napier and 13 per cent in Wairoa, but falling 9 per cent in Hastings.

The median number of days to sell a property in August went from 31 days in July to 29 days.

The region's 10-year median for number of days to sell was 45 days.

Currently Hawke's Bay has the second-equal lowest level of inventory in New Zealand with just 10 weeks of supply, two weeks fewer than August last year.

Cole Murray mortgage broker Steve Davies said winter was steady but the traditional September growth was tempered by political uncertainty - inquiries fell as campaigning rose.

"People are waiting just to see what happens in the election," he said.

"Now there is the announcement from National they will double the [KiwiSaver] HomeStart grant on January 1 if they are elected, so potentially that is going to sit in the mind of first-home buyers.

Property investors were also watching the election, with the potential for a capital gain tax from 2021 should Labour take power.

Nationwide the number of properties sold fell 20 per cent during August from the same time last year, but the national median price was up 8.2 per cent to $530,000.

"If you looked at the number of properties sold, without looking at the bigger picture, one might assume that the market was showing significant signs of slowing," Ms Norwell said.

"However, as prices are holding up, and even increasing, then it suggests that people may be holding off from selling their property unless it's absolutely necessary."