Jobs 'missing ingredient' in housing market

Hawke's Bay is too distant from Auckland to cash in on the super city's booming housing market, especially with job growth remaining an issue in the Bay, an economist says.

Real Estate Institute figures out this week showed Auckland house prices surged 13 per cent over the past year, while in Hawke's Bay they dropped 4.2 per cent.

New Zealand Institute of Economic Research principal economist Shamubeel Eaqub said the figures highlighted diverging economic patterns in different parts of the country.

While the Auckland property market was "going gangbusters," in most other parts of the country, including Hawkes' Bay, "not a great deal is happening," Mr Eaqub said.

Looking at longer-term figures, Hastings property prices were down 3 per cent, and Napier values down 3.4 per cent, from the peaks reached in 2007, while Auckland prices had climbed over 45 per cent since then, he said.

The Auckland surge reflected a combination of economic and population growth in the region, while a lack of growth in other areas was holding back house prices in the stagnant provinces including Hawke's Bay.

"We're seeing a bit of the Auckland growth spilling over to places like Hamilton and further towards Tauranga.

Auckland, the Bay of Plenty and Waikato are becoming much more closely integrated, whereas Hawke's Bay is still quite a distance from that influence directly," he said.

Mr Eaqub said while some house buyers may be attracted to the low prices on offer in Hawke's Bay, combined with the lifestyle opportunities in the region, those attractions remained hampered by a lack of work opportunities in the province.

"If [Auckland] prices keep rising, the relatively low cost of housing and fantastic quality of life [in Hawke's Bay] will be attractions for some people.

"The missing ingredient continues to be sufficient jobs," Mr Eaqub said.

"It's the employment opportunity that's really the big challenge."