Whanganui house prices have rocketed 37 per cent in 2020 and experts are not predicting a slow-down in 2021.
Mike Tweed reports.
According the OneRoof-Valocity house price index, the average price-tag for a home in Whanganui sits at $410,000.
House values in Manawatu-Whanganui have risen 12.4 per cent in the past eight months since the Covid-19 lockdown.
OneRoof editor Owen Vaughan said outside of Gisborne and Marlborough, Whanganui had seen the "most growth post Covid-19".
The "fear of missing out factor" had played into the continued rise in local prices, Vaughan said.
"There's that desperate scramble to secure a property, because if you don't then it's just going to be hopeless if prices continue to climb.
"These are startling numbers, especially when you think that Manawatu-Whanganui, and Whanganui specifically, had seen a lot of growth last year as well, with a lot of investor money and first-home buyer money.
"We suspected it would be a market that would soften post-Covid, mainly because of the amount of investors that had been in there. That hasn't really been the case, and you're really seeing buyers step up and take advantage of the low interest rates that are out there."
John Bartley from Bayleys Whanganui thinks the trend will continue in 2021.
"Major corporations up in Auckland are downsizing, and a lot of them can work from home so they can work from anywhere," Bartley said.
"The major issue we have is that, yes, we can achieve really good prices, but if you're buying and selling in the same market, then you're selling at the top of the range but also buying at the top of the range.
"There's a limit of stock as well, and people are holding off on listing their property, because they'll have nowhere to go [if their house is sold]. It's a bit of a vicious cycle, really."
Even if the "bubble burst" in bigger New Zealand centres, Bartley said he couldn't see Whanganui being affected to a similar degree.
"We've got economists on tap that are contracted to Bayleys exclusively, so we get a lot of intel. The pricing has always been rising and I think it'll continue to do so.
"Until you get supply the demand is only going to get higher. You can pull a few levers, like interest rates and different things like that, but until you get that [supply] fixed, I don't think you're going to see much difference to what's happening now."
Bartley said he didn't think there would be enough houses built locally "to curb that demand any time soon".
"You're looking at the end of next year before you could even move into a [new] house, and how many houses can they build at any one time?
"The population is at 48,000 and it's predicted to get up to 50,000. That doesn't really compute when it comes to housing stocks."
Property Brokers Whanganui branch manager Ritesh Verma said he had been in the real estate industry for 16 years and had "never seen a market like this".
"That's in terms of price and buyer frenzy of course, but also in terms of stock," Verma said.
"There are houses out there that are sold in a matter of days. There's not a lack of eyes out there, I can tell you that."
New Healthy Homes Standards had resulted in more rentals coming up for sale in 2020, Verma said.
"That's scared a lot of landlords who don't want to throw money at their properties. They've just thought 'bugger it, I'm going to sell', and while the market's up they might as well cash in.
"There are still a lot of first-home buyers around, and people are coming in from out of town, there's no question about that. They're coming here to live as well, not just to buy, so that's good."
Verma said Whanganui was still near the "bottom of the rung in regards to house prices" in New Zealand, and even with recent growth, "we're still one the cheapest cities in New Zealand with a reasonable population".
"Yes, we've gone up quite a lot, but we're still cheaper than most places in the country.
"Me personally, I've never been more excited to be a part of Whanganui."
Meanwhile, Vaughan said the huge demand for houses in Whanganui was "a double-edged sword" with those who already owned property seeing their investments appreciate in value, and those who didn't have a foothold in the market less likely to have the capability to buy.
"When you've got outside players in a market like Whanganui, where you can pick up a house for almost double what you need for a deposit in Auckland, then you're talking about an uneven playing field," he said.
"People are having to stretch themselves, and low interest rates are allowing them to do that, but many first-home buyers in the market are going to hit a ceiling at some point."
Summer was "generally a quite period" for the real estate industry, Vaughan said, with fewer listings and "not much in the way of buying and selling".
"The start of 2021 will be a lot stronger than the start of 2020, which again was a strong period on the whole for New Zealand in terms of the housing market.
"I don't see house prices coming off the boil any time soon, and proposed changes to the LVR [loan-to-value ratio], which some of the banks have already introduced, won't really have an effect on prices until the later half of 2021 probably."