One Roof Property Report: How the housing boom has changed the Whanganui market

The average property value in Whanganui has jumped 60 per cent over the past two years. Photo / Bevan Conley

The housing market boom has irrevocably changed the face of Whanganui, turning previously affordable suburbs into no-go areas for first home buyers.

New analysis of house price inflation between January 2020 and January 2022 shows a sharp decrease in the overall number of New Zealand suburbs with an average property value of less than $500,000, from 975 to 434.

The boom has had a dramatic effect on Whanganui, with the number of sub-$500,000 suburbs in the territorial authority dropping from 21 to eight over the 24-month period.

The research, carried out by NZME-owned property listing site OneRoof.co.nz and its data partner, Valocity, and published in the OneRoof Property Report, shows growth at the top end of the market, with Whanganui gaining two $1m plus suburbs.

OneRoof editor Owen Vaughan said the research highlighted the growing inequality in Whanganui's housing market, where the overall average property value jumped 60 per cent, from $382,000 to $614,000.

"Back in January 2020, just before Covid struck and interest rates were slashed, no suburbs in Whanganui had an average property value above $711,000. By January 2022, 13 suburbs in the territorial authority had a higher average property value.

"The housing frenzy of last two years, fuelled by low interest rates and FOMO, has radically altered the landscape for buyers and sellers."

The research also showed disruptions in the country's seven major metros. The city most affected by the boom was Wellington, where the share of suburbs with an average property value of less than $1m fell from 78 per cent (44 suburbs) in January 2020 to 12 per cent (seven suburbs) in January 2022.

Tauranga saw the next biggest fall in sub-$1m suburbs: 86 per cent of the city (20 suburbs) was in the price bracket in 2020 but by 2022 that had fallen to 34 per cent, 8 suburbs.
The number of sub-$1m suburbs in Auckland fell from 123 (44 per cent) to 26 (9 per cent) over the same period, while the number of suburbs in the $1.5m-plus band exploded from 57 to 149.

The least changed by the boom was Dunedin, where the overall average property value grew 33.4 per cent over the two-year period from $568,000 to $758,000 and the number of sub-$1m suburbs fell 14 per cent, Vaughan said.

Valocity head of research Wayne Shum said the growth over the two-year period was fuelled by record-low mortgage rates and the suspension of the loan to value ratio restrictions after Covid-19 hit in March 2020.

"The rate of house price growth over the last two years was highly unusual. Before Covid, it had taken New Zealand's property market almost five years to achieve the same amount of value growth, with Canterbury and West Coast taking more than a decade to match their growth levels."

However, Shum said that housing market was unlikely to see the same amount of growth in 2022.

"As inflation begins to bite and mortgage rate rises, we are likely to see the growth rate moderate to level seen pre-Covid. And expect to see some value softening in some locations or within some property types."