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Gisborne tops country in house price increase

Eight out of ten Gisborne house sales now fetch $500,000 or more, as the region's house prices hit an all-time high — again.

Newly-released data from the Real Estate Insitutute (REINZ) shows the region's median price rose 43.9 percent in 2020 — the biggest increase in New Zealand.

“The Gisborne region saw median house prices reach $590,000 in December 2020, up 43.9 percent year-on-year and a new record for the region,” REINZ regional director Neville Falconer said.

“Sales volumes increased 31.1 percent year-on-year, from 48 properties sold in December 2019 to 63 properties sold in December 2020.

“First-time buyers are still active in the market trying to secure a property, however, saving for a deposit and accessing finance has continued to be a barrier for some purchasers. Investors are still active but are becoming a lot more particular with the properties they buy, as the new regulations approach.

“Auction remains a popular method of sale, with 68.3 percent of all properties sold by auction in December 2020, up from 50.0 percent in December 2019. Properties sold in the $500,000-plus bracket have increased from 22.9 percent of the market in December 2019 to 81 percent of the market in December 2020.”

It was the fifth time in 2020 that the region's median price hit an all-time high.

The median price here has now risen $180,000 over the past 12 months and Property Brokers Gisborne branch manager Philip Searle said there was no sign of a slowdown.

“The Gisborne market has certainly performed well over the last year and is showing no sign of slowing down.

“While the reported median sale price has jumped 43.9 percent over the last year it is important to realise that the median is across all price ranges and can be skewed somewhat depending on the volume of sales in any particular price range. Notwithstanding this, the market certainly has had a significant increase across the board and this is driven by the substantial demand for residential property.

“The lockdown caused a lot of people to reconsider their lifestyles and actively consider living in areas like Gisborne, compared with the main centres.

“With our weather, beaches and more relaxed lifestyle Gisborne is becoming recognised as an attractive place to live.”

Mr Searle said it appeared a number of Gisborne people who had been overseas were returning home, which was also putting pressure on the market.

“While house prices have increased substantially, Ashley Church (property commentator) is quoted recently saying that in the 1990s the average cost to service a mortgage was 52 percent of the household income. This has now fallen to 37 percent so it is considerably easier for homeowners today.”

However, it was a different story for first-home buyers trying to save for a deposit.

“In my opinion the Government should look at innovative ways to help the first- home buyers with their deposit.

“No doubt the market will slow down a bit from time to time but while there is such a demand it is unlikely that prices will go backwards. We are seeing a lot of people taking advantage of the market to trade up to something newer, larger or just more attractive to them.”

Bayleys Gisborne director Simon Bousfield also expects conditions to continue to drive values.

“Shortage of stock continues to create excess demand on almost all property listed. Most properties are being sold off the back of either three or four-week marketing campaigns with a deadline, usually an auction, so multiple buyers are competing in a transparent process in the auction room.

“We saw this throughout multiple auction days in the latter part of 2020.

“Our auction days throughout January, February and March are already filling fast, which will help with demand, but will unlikely be enough to satisfy the extent of buyers currently across all properties listed.

“I expect we will see this level of demand throughout the beginning of 2021 while interest rates remain low, and property is deemed a safe investment.”

RUNAWAY TRAIN: Gisborne now has a record median house price of $590,000. File Picture by Liam Clayton