Small towns big movers on price front

House prices in a South Island town rose by 13% this year, making it one of a handful of areas bucking the market’s downward trend, Quotable Value says.

The property valuation company’s (QV) latest figures showed prices dropped in each of the 10 biggest cities in the quarter to May, while only Tauranga and Christchurch had not had price declines since the start of this year.

But they also revealed at least 10 towns and areas outside the main urban areas have had price increases of above 5% over the first five months of the year.

The coastal South Island town Kaikō ura had the biggest jump in prices, up 13.6% to an average price of $702,130.

Central Hawke’s Bay, up 11.0% to $732,801; Stratford in Taranaki, up 10.2% to $545,188; Waimate in Canterbury, up 9.5% to $445,852; and Westland on the West Coast, up 9.0% to $425,604, rounded out the top five.

Opotiki and Kawerau in Bay of Plenty, Timaru and Ashburton in Canterbury, and Buller, West Coast, also had price increases of over 5%.

QV general manager David Nagel said these areas were exceptions to the general downward trend nationally – for the time being. Their price increases were slowing and were expected to dip into negative territory in the months ahead, he said.

‘‘Every market is different, and not every market is at the exact same point in its cycle. The main urban centres, especially Auckland and Wellington, tend to be ahead of the regions in terms of peaks and troughs.

‘‘But they are all facing rising interest rates and tightening credit conditions, which is greatly inhibiting price growth and market activity.’’

The only main urban centre where price increases had picked up on a monthly basis was Queenstown, where they were up 4.5% over the three months to May.

On a regional basis, Canterbury and West Coast had the biggest price increases since the beginning of this year, at 2.6% and 4.6% respectively. In contrast, prices in Auckland and Wellington were down by 3.8% and 4.9%.

Nagel said returning Kiwis and former city dwellers seeking a different lifestyle or more affordable housing in the regions had been one driver of price increases in recent times.

People moving to the regions could also be one reason that many of these places had so far managed to dodge the downward trend occurring elsewhere, he said.