$72,000 increase in house prices
“Significant” hikes in house prices will continue until Gisborne gets a new housing subdivision to ease pressure on historic low-levels of stock, realtors here say.
But potential new housing developments look to be “years away”.
Latest data from the Real Estate Institute shows median prices here are among the fastest rising in New Zealand, shooting up $72,000 over the past 12 months to $410,000.
That was the third highest rise in New Zealand. Only Southland (up 32 percent) and Manawatu/Wanganui (up 27.8 percent) saw higher increases.
It also marked a big rise of $26,000 from Gisborne's median just three months ago.
“The increase is likely due to the lack of supply contributing to the demand.” REINZ regional director Neville Falconer said.
“This is reflected in the decrease in the number of properties sold in the sub-$250,000 price bracket dropping from 22.22 percent in December 2018 to 6.82 percent in December 2019. The number of new listings that came on to the market (30) was the same as December 2018.
“In December, Gisborne had five weeks' of inventory available, the equal lowest inventory available in the region since records began.”
There were still “many” first home buyers active in the market but investor activity had decreased compared with last month.
“In saying that, many buyers are at the higher end of the market due to the lack of affordable houses, with around 30 percent more cash buyers who are prepared to make a purchase, which is likely to be contributing to the competitive nature of the current market.”
Mr Falconer expected more listings to come on to the market but prices to stay “relatively the same”.
Bayleys Gisborne sales manager Karen Raureti said agents had been “pleasantly surprised” with the sale prices achieved.
“We had a number of good deals done over the Christmas New Year period.
“If there is a lack of stock then sale numbers are going to drop. People will sell if they either need to — moving out of the district or deceased estates — or if they have managed to secure another property.
“The problem we face in Gisborne is people having options to move to.”
Ms Raureti pointed out six of the eight new residential listings Bayleys looked at this week were with vendors either living out of town and wanting to divest their Gisborne for work commitments.
At the same time, buyers were from out of town moving here for work, “so there appears to be an equal shift of people moving out of town and those coming in at the moment”.
“Until there is a new subdivision to allow vendors an opportunity there will be pressure on demand which should keep the pressure on buyers to perform when purchasing and vendors benefiting from this.
“First home buyers are in the market, however they are not often the best buyers and have to compete with buyers that don't have as many restrictions on lending.”
Property Brokers Gisborne branch manager George Searle said he could not see anything changing in the market until the creation of a new housing subdivision, which could be “years away”, or a hike in interest rates.
“There is just a shortage of supply, and purchasers are facing the brunt of it and competing with five to 10 people at auction.
“At the moment, why our prices have gone up, in my opinion, is the economy is good, (there is) a shortage of supply, and interest rates have dropped from 5 percent to about 3.5 percent over the last 18 months.
“This has meant if you are paying another $100,000 on your mortgage you're actually paying out the same amount. So the affordability on a daily basis hasn't changed.”
Mr Searle said there had definitely been a “significant leap” in prices over the past three to four months.
“I don't think it's a monthly anomaly. I do think there has been a significant leap in price.”
He added first-home buyers were still very much in the market.
“They have been snapping up the majority of investment homes that would normally go to investors, so they are strong, very strong and most of them are bidding at auction, which is good.”