Ashley Church: Why house prices are up in the regions

Recently I travelled back to Napier — my home town — to watch Elton John perform at Mission Estate. It’s a concert venue with which I have a special link.

Back in the early 90s, I handled promotion for Napier City Council. Me and then Mayor Alan Dick were approached by the International Management Group (IMG) about hosting concerts at the Mission.

They wanted to create a world-class outdoor event and planned to feature Dame Kiri Te Kanawa as their first artist, but they needed council help to get it over the line.

Alan and I were able to convince council that this was a project worth supporting, and the rest is history. Twenty-five years on the Mission has hosted some of the world's greatest artists and continues to be one of New Zealand’s most iconic outdoor concert venues.

Over that same 25 years, the city has leveraged its Art Deco architecture, its well-planned city scape, stable workforce, and wine culture to become a tourism hub and an extraordinarily attractive place in which to live.

But Napier hasn’t been alone in that transition. Nelson, New Plymouth, Invercargill, Tauranga, Palmerston North, Timaru, and Hamilton have all transformed themselves into desirable places to live, with vibrant cultural, entertainment and arts scenes and competing claims to fame.

At least four of these cities — Napier, New Plymouth, Nelson, and Invercargill — also suffered from the tyranny of distance from a metropolitan centre. Yet this has made little difference to their ability to position themselves.

Few things say more about confidence in a location than rising house prices.

Houses in Napier typically sold for $140,000 in 1999; the median sale price is now $520,000.

The median sale price for Nelson in 1999 was $155,000; it's now $552,500. New Plymouth and Invercargill house prices have jumped from $113,527 and $65,000 to $440,000 and $285,000 respectively.

So what changed? How did these regional centres manage to turn their once tired towns, often struggling economies, and quaint provincial amenities into the vibrant destinations they are today?

Some of it has been due to good local leadership, a little to the appeal of lower living costs — and of course some to the lifestyle advantages.

But far and away the two main causes of growth in these cities are the rise of the internet and the gradual improvement in regional transport links.

The Napier-Taupo road is a good example. When I was a kid this was a 3.5 hour journey. It’s now an hour and a half— and there’s a version of that story in every part of the country.

Air links have also improved dramatically, although the recent Jetstar decision to pull out of some of these cities is a setback.

But the number one contributor to growth in the regions since the mid-90s is the internet. Businesses and professionals who once had to be in a metropolitan centre can now operate just as successfully in a regional centre. The speed of data, the availability of skilled staff and the ease of digital communication means the obstacles of distance have now all but evaporated.

This will inevitably lead to a swing back in favour of the regions over the next 20 years. It also means that the former National Government’s focus on national roading and infrastructure (which the Coalition has belatedly copied after killing it off for two years) was absolutely essential, and that councils will need to plan long term to accommodate this demographic change.

House prices in Napier, Nelson, New Plymouth and Invercargill all rocketed in the last 20 years.