House prices hit a new two-decade high

"That's terrifying. That's the main reason so many people my age don't see owning a house as a realistic goal anymore." James Cross

Manawatu-whanganui house prices have pushed to another alltime high.

Houses in the region are the most expensive they’ve been in more than two decades, breaking a record set less than a year ago.

The Real Estate Institute of New Zealand (REINZ) put the region’s median house price this June at $280,000, 19 per cent higher than in the previous year, which was the fourth fastest growth of every region.

That’s $15,000 more than the record high hit in August, and the highest the region’s prices have been since REINZ records began over 20 years ago.

REINZ Manawatu spokesman Andy Stewart said he was amazed each month by the ‘‘lift off’’ in prices when he put together the region’s real estate statistics

Palmerston North and Feilding both hit their highest prices since 1997, with the average sale prices reaching $362,550 and $355,000 respectively.

Demand was still far exceeding the housing supply, which has been a long-term problem in Manawatu for the past two years, Stewart said.

Last year, he said the market was the tightest he’d seen in 29 years, with an average of 250-260 houses on the market at any one time.

That looked relatively good this year, which has averaged 190-200 houses on the market, Stewart said.

‘‘It’s just been going back and back. There’s not much we can practically do about it. We just have to ride the wave.’’

That wave seems to keep moving home ownership further into the future for Studylink loans processor James Cross.

His Kiwisaver account has grown steadily and he’s managed to save a small amount extra on top of that, after rent and the bills were paid – not every pay period, but fairly regularly, he said.

But the median sales prices in Manawatu have grown a lot faster, and he knew there was fierce competition for every house.

‘‘That’s terrifying. That’s the main reason so many people my age don’t see owning a house as a realistic goal anymore.

‘‘Most think you have to get into quite a nice job before you can even consider it.’’

Cross said he still aimed to get his own house at some point down the track. But it would take a big shift, either in the housing market or his own life and career.

‘‘Hopefully, eventually, if I combined income [with someone], we could afford a house. But just on my own, no, never.’’

Feilding property brokers NZR agent Peter Barnett said despite everything, first home buyers were still the bulk of sales in the lower half of the market.

‘‘There’s not a strong demand coming from property investors at the bottom half and that lets [first home buyers] stay competative.’’

Inquires from local property investors have tapered off after lending restrictions were tightened last year. The ones still active in Feilding and Palmerston North tended to come from Wellington and Auckland, and they were going for the more expensive houses.

Even with the 40 per cent deposit requirement, it was still cheaper for them than what was on offer back home, Barnett said.