Unemployment, a lack of major employers and reliance on tourism dollar are likely to negatively impact on Whangārei's housing market during and after Covid-19 lockdown, latest figures from OneRoof show.

Regions with a strong primary sector and better work opportunities such as Hawke's Bay, Waikato, Taranaki, Southland and Canterbury are expected to fare better, judging by the behaviour of their housing markets leading up to the coronavirus crisis.

In comparison, growth in Whangārei's housing market slowed in the months leading up to the lockdown, which showed demand even in usually highly sought-after suburbs such as Morningside and Hikurangi had been tapering off.

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OneRoof editor Owen Vaughan said Whangārei's housing market was not in the strongest of positions going into the lockdown, with a modest growth of 2.8 per cent in the first quarter of this year.

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"The key factor that will determine the future of your housing markets is unemployment. Cities and regions that are reliant on tourism dollars will be more exposed than those where agriculture and government are the major employers."

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He said "hot" suburbs with low value houses that have seen huge growth in the past 12 months that were popular with first home buyers and investors may be at risk of big price drops.

"Only financially secure investors circling for bargains will be active now, and they'll be holding off to the end of mortgage relief measures to snap up mortgagee sales. Mum and dad investors and new homeowners may be forced to sell in six months if they have
lost income or lost jobs.

"First home buyers may not feel secure enough to buy in these suburbs as well, leading to a drop in demand and price drops."

Vaughan said leafy and premium suburbs in good locations may be better placed to ride out any economic downturn, even if growth had been sluggish over the past one year.

These areas may see price drops, he said, but were unlikely to see a flood of forced sales and demand for these locations was unlikely to drop.

Median house value in Whangārei the day before lockdown shows Otangarei was the best performing suburb, registering a quarterly change of 10.4 per cent to sit at $265,000 compared with the first quarter of 2019, followed by Waipu (8.3 per cent, $845,000), and Whangārei Heads (7.4 per cent, $795,000).

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Otangarei's residential housing market is presently the best performing in median house price in Whangārei. Photo / Michael Cunningham
Otangarei's residential housing market is presently the best performing in median house price in Whangārei. Photo / Michael Cunningham

In terms of 12-month change, Parahaki came tops with a 20 per cent increase ($570,000), Riverside 21.4 per cent ($595,999), Otangarei 17.8 per cent ($265,000), and Waipu 14.2 per cent ($845,000).

Vaughan said the value on March 25 was the number OneRoof would be measuring against in the months ahead as more sales data came through.

He said suburbs with high quarterly growth such as Otangarei, Waipu, Whangārei Heads, Matapouri, One Tree Pt, Horahora, Onerahi, Riverside, Avenues, Ruakaka, Kamo, Woodhill, Whau Valley, Regent, and Kensington may be in a position to weather the economic downturn.

Those with low or negative quarterly growth such as Matarau, Parua Bay, Whananaki, Glenbervie, Whareora, Whakapara, Kiripaka, Mangapai, Morningside, Pakotai, Ngunguru, Otaika, Hikurangi, Ruatangata, Tutukaka, Portland, Langs Beach, Maungatapere, Kokopu, and Poroti would see price drops, he said.

Morningside, a highly sought-after suburb, recorded a dip in median house prices in the first quarter of this year. Photo / Michael Cunningham
Morningside, a highly sought-after suburb, recorded a dip in median house prices in the first quarter of this year. Photo / Michael Cunningham

Whangārei builder Conor Matson had been looking to buy a piece of land and build on it on a lifestyle block but unaffordability and a lack of empty sections put paid to his plan.

But he managed to get on to the property ladder by buying a three-bedroom weatherboard house in Maunu a couple of days before level 4 lockdown kicked in and moved in with his partner last week.

He paid in the mid-$500,000s and said house hunters would keep pushing prices up, even during Covid-19.

"Mostly all the good houses in the price bracket I was looking at had multiple offers and got sold quickly so it was difficult to know how much to bid for. I don't think prices will come down because there are fewer houses on the market," said the owner of Condor Built Developments.

"It may take longer to sell. The loan-to-value ratio and interest rates are low and that will prompt more people to buy. Some people might lose their jobs and won't be able to service their mortgage so more houses on the market," he said.

ASB Bank is forecasting a 6 per cent drop in national house prices this year, in the face of a deteriorating labour market, falling net migration and rental declines.

The bank is also expecting unemployment rate to rise from 4 per cent to just under 9 per cent and wage growth to slow sharply, so servicing existing mortgage debt will become more difficult for those affected.

By way of comparison, during the 2008 global financial crisis, New Zealand's unemployment cycle moved from 3.3 per cent to 6.5 per cent, with house prices correcting by 11.9 per cent.