House prices soar
House prices here have skyrocketed to an all-time high, adding $228,000 to the region's median price in just one year.
Latest data from the Real Estate Institute (REINZ) shows the median price here is now $630,000, encouraged by a low number of sales, making Gisborne the nation's fastest rising housing market by far.
“This month, the region experienced the lowest level of March sales since 2014, with 41 properties sold, down from 45 at the same time last year,” REINZ regional director Neville Falconer said.
“Activity levels for the region have started to slow slightly, as purchasers start to take more of a wait and see approach.
“Lower sales volumes, paired with a 15.3 percent annual increase in new listings has resulted in an 8.5 percent increase in inventory for the Gisborne region and a slight easing in pressure.”
Mr Falconer said the underlying value of property in the region was still rising.
Gisborne's year-on-year rise far outstripped the rest of New Zealand, well ahead of the West Coast's 36.4 percent rise and neighbouring Hawke's Bay and Bay of Plenty (30.5 and 24.5 percent up respectively)
Bayley's Gisborne director Simon Bousfield said the new median was “a huge jump” from $401,618 this time last year.
“Considering in March 2016 our median was $230,000, we are now up $400,000 in five years.”
Mr Bousfield said while there had been “a noticeable exit” of investor buyers from the market following new government proposals to restrict bank lending on speculators, the strength of the owner-occupier market was still on show.
“There was strong interest at auction from buyers moving to Gisborne or climbing the property ladder with the intention of living in their purchased property.”
The fact fewer properties were sold than last March was also interesting, given the effect on sales last year of the Covid-19 lockdown.
“We expect April to be right up on sales versus last year given the number of new listings we are experiencing coming to market this April,” Mr Bousfield said.
“One third (34 percent) of all properties in New Zealand sold by auction in March — the highest ever seen.”
Gisborne (at 53.7 percent) had the largest number of properties sold by auction, followed closely by Auckland at 52.4 percent.
The level of demand for property in Gisborne was driving auction as the preferred method of sale, Mr Bousfield said.
“The process allows buyers to compete transparently in the auction room, and offers the vendor the best unconditional price the market has to offer at any given time. Other processes often don't allow for maximum value to be truly realised.
“Gisborne had the highest increase in inventory levels (houses available) in March, up 8.5 percent (94 to 102 properties), a positive sign for our housing market given the constant level of demand.”
Various projects were under way around Gisborne that would further provide housing-and-section-to-build opportunities for buyers, providing some relief from the shortage of supply versus demand.
REINZ data shows 75 percent of all sales last month in Gisborne went for $500,000 or more, and about nine percent of all sales fetched $1m or more (two properties selling for $1.8m and $1.93m respectively).
“The number of properties in New Zealand selling under $500,000 fell from 27.9 percent in March 2020, to 15.3 percent in March 2021, while the number of properties selling over $1m increased by 20 percent, an indication that the rising house values we are experiencing locally are not only across our region,” Mr Bousfield said.
Property Brokers Gisborne branch manager Stefan McNeely said while the Gisborne residential median price has increased significantly month on month to March, the Gisborne market was relatively small compared to others.
“That tends to amplify the fluctuations we see from one month to another.
“These fluctuations are influenced by the number of higher or lower priced properties being sold in a particular month.
“We are still seeing good numbers at open homes, and while the percentage selling under the hammer has decreased slightly this month due to a bit of uncertainty over the Government's involvement in the property sector, properties are still selling..
“We still have record low interest rates and there are still more buyers than properties available on the market. I think there will be some hesitation in the housing market when it comes to those investing in rental housing in the next few months. However, the general demand for housing remains so overall we will continue to see price increases.”
Last month the government announced it would double the bright-line test for investors to 10 years with an exemption to incentivise new builds. The interest deductibility was also removed for future investors and phased out on existing residential investments.
However, it also intends to keep the house price cap for First Start home loans for Gisborne at $400,000 — Something REINZ previously said needed to be reviewed.
“Today's house price rise of 56.9 percent to $630,000 will certainly make difficult reading for Gisborne locals hoping to get on to the property market — especially given that 90 percent of houses sold in the region were for in excess of $400,000 (the threshold for existing properties) and 75.6 percent sold in excess of $500,000 (the threshold for new build properties),” REINZ acting chief executive Wendy Alexander said.
“We have not had any response from the Government to our calls to review the thresholds for Gisborne. However, we suspect that is because they are waiting for the impact of the March 23 changes to start to show up in the data.”
“Looking forward, we would expect prices to continue rising in the Gisborne region, albeit at a slower rate than we've seen in the last year, with the potential for some easing of prices towards the end of the year.
“Hopefully, if prices do start to ease a little by the end of the year, this will make for more palatable reading and make it easier for first time buyers to get on to the market.”