Hawke's Bay house prices: 'Rent for the rest of my life?

Parekura Simpson and Te Kerehi Thompson are struggling to buy their first home in Hawke's Bay. Photo / Supplied

First-home prices are continuing to climb in Hawke's Bay and have risen even faster in this quarter, according to the latest QV Quartile Index.

Hawke's Bay man Te Kerehi Thompson has been looking to buy a home with his partner for quite some time but fears he may have to rent for the rest of his life.

The 25-year-old and his partner are both in full-time employment, and have saved tens of thousands in their KiwiSaver. They have also had an $8000 Kainga Ora grant approved, however, it still isn't enough.

Based on some personal debts, the Wellington-born man said "no bank wants to know me" when it comes to a home loan.

"I suppose for me I will have to work hard and pay debts off for the next five years to even consider the bank's invitation," he said.

Property prices in Napier have topped most recent QV Quartile Index. Photo / Warren Buckland

In that time, with house prices having increased in the likes of Hastings by 37 per cent in the past 12 months (OneRoof statistic), Thompson said it's hard to tell even how much a small two-bedroom home would cost.

"Is it best to maybe just rent for the rest of my life and save my KiwiSaver for retirement? Only time will tell," he added.

Napier topped QV's latest quartile index for both its Lower Quartile (LQ) house prices and Upper Quartile (UQ) prices.

The index tracks residential property prices and sales at both ends of the market – namely the top 25 per cent most expensive houses in New Zealand, and the bottom 25 per cent least expensive houses.

Napier's LQ prices increased by 17.47 per cent to $550,360 and UQ house prices rose 15.68 per cent to $1.188 million, coming first and second with the largest property price percentage increase in New Zealand.

Hastings' LQ and UQ house prices were also in the top 10, ranking sixth and eighth.

QV general manager David Nagel said there's growing evidence to suggest investors are leaving the market following the Government's recent tax changes.

Napier's Lower Quartile prices has increased by 17.47 per cent in the last quarter. Photo / Warren Buckland

"But we've yet to see any impact of this on house prices with the entry-level houses they typically target rising in value even faster than before the announcement," he said.

OneRoof editor Owen Vaughan said the Hawke's Bay property market has seen some of the biggest house value increases in the past 12 months since the Covid-19 lockdown was lifted, which is leaving some first-home buyers behind.

"The market's moved on."

Vaughan said a recent OneRoof survey showed first-home buyers seem to be retreating from the market.

He said those buyers who held off making a purchase in the past year will have seen prices move further and further away from them.

OneRoof figures show Hawke's Bay has had a 34 per cent lift in prices over the past year, which has taken the average house price to just under $700,000.

"Buyers need to accept that those price increases are baked in now, the prices they would've been paying 12 to 13 months ago have just gone."

Vaughan said the Government's forecast is that house price growth is going to slow down to minimal levels in the next 12 months with investors also leaving the market.

"It's still too early to say whether the Government's shake-up in March will have the desired effect, which is to cool the market and tilt the playing field towards first-home buyers," he added.

Ray White Hawke's Bay managing director Elanor McDonald said it's first-home buyers' time to make a move.

"First-home buyers are feeling a bit scared of reducing prices but are still out in numbers - this is actually the window of opportunity for them.

"When the investors back off - temporarily - the competition lessens."