Property value rises in Rangitīkei, Whanganui leading market growth in New Zealand

Rangitīkei and Whanganui are two of three leaders in property market growth in New Zealand, OneRoof's latest data shows.

Rangitīkei recorded the highest annual growth in property values of any territorial authority in New Zealand in the year to January 2019, according to figures published in the latest target="_blank">OneRoof Property Report, compiled with data partner Valocity.

Values in the district rose 26.34 per cent for the 12 months to January, while Whanganui came in third with 22.79 per cent, behind Opotiki (23.6 per cent).

James Wilson, Valocity director of valuation and innovation, said it was important to note that the buoyant market conditions in Rangitīkei were coming off a very low value base.

"This is considered evidence of the 'catch up effect'," Wilson said.

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"This effect generally occurs two to three years after larger centres experience significant increases in house value. Market participants who are either blocked out of larger urban centres, or investors seeking to make comparably more affordable investments, turn their sights on these smaller localities.

"Over 60 per cent of sales in the last quarter transacted below $500,000, making the region very affordable when compared to other main centres."

First home buyers made up more than a quarter (26.5 per cent) of all new mortgage registrations in the Rangitīkei area in the last quarter, Wilson said.

"Investors who own three or more properties accounted for 17.3 per cent with multi home owners (two properties) representing 15.9 per cent," he said.

"The area appeals to investors given the comparably affordable 'buy in' price which allows them to acquire stock with a lower deposit than other main urban centres, combined with the fact that rental rates in Rangitīkei are relatively strong, producing good returns."

Wilson expected the rate of growth would slow towards the middle of the year.

"For those seeking to buy, I would advise to consider the fact that capital growth may slow, so a focus on more traditional factors such as rental returns should be adopted," he said.

Whanganui's growth was also well ahead of that in the main urban centres, of which only Dunedin recorded double-digit growth, OneRoof editor Owen Vaughan said.

In Whanganui, OneRoof records the biggest increase of 27 per cent for Aramoho with a median value of $237,000. Putiki comes in next with a 25 per cent increase (a median value of $308,000) for the 12 months to January, with Tawhero third in the percentage change table at 24 per cent ($288,000).

"The price point will attract increased attention from investors, who will be looking for properties that offer better yields than those found in Hamilton and Tauranga," Vaughan said.

Philippa Ivory, of Ray White Wanganui, said the hot market is evident in the sales figures.

At the top end of the market, properties that would have gone for $450,000 are now creeping up to $550,000. Many recent sales are breaking street records and prices are starting to push out first home buyers. Houses in some suburbs now command $600,000 or more.

The market was good for investors, with some rental returns as much as 8 and even 11 per cent (compared to the rule of thumb of 5 to 6 per cent), Ivory said.

Bayley's Russell Duggan said many buyers were people returning to the district.

"[Buyers] are a mix of retiring farmers from the district, plus people in their 50s moving in to free up money from other places," Duggan said.

"Then that will change as family visits, the younger ones decide to move here. I've just had that happen. People decide money is not so important, lifestyle is."