Town’s prices on way up

PALMERSTON is being picked as a likely hot spot for house sales as Dunedin's property market overheats.

Quotable Value area manager Tim Gibson said an increasing number of firsthome buyers were looking to Palmerston — as well as Waihola, Milton and Waikouaiti — as rising prices were putting home ownership in Dunedin further out of reach.

‘‘Dunedin’s residential property market is certainly on fire right now, stoked by recordlow interest rates, high demand and a low volume of housing available for sale,’’ Mr Gibson said.

‘‘Potential purchasers are finding it really tough to even get an offer considered here these days.’’

According to new Real Estate Institute data released yesterday, the median house price in Otago last month was $620,500, a 16.7% jump from December 2019.

In Palmerston, a threebedroom home on a quarteracre section, with two bathrooms, new decking and a garage, recently sold for $355,000, Mr Gibson said.

A threebedroom home on a quarteracre section in Milton recently sold for $400,000, while a modernised threebedroom bungalow in Waihola, with lake views, sold for $461,500.

‘‘If I was to pick just one of these towns with the most potential to grow, it would be Palmerston.

‘‘It has good schooling facilities, a recently built medical centre, and it’s close to the Macraes gold mine, which is a major employer.’’

Commuting times and costs had to be factored in if buyers wanted to continue working in Dunedin, but there was certainly ‘‘a lot more bang for your buck’’ in Palmerston.

Waitaki Mayor Gary Kircher agreed.

Palmerston was a town with ‘‘so much potential’’ — and the commute to work in Oamaru or Dunedin would be considered small for a lot of people who lived in Auckland, or even Wellington and Christchurch, he said.

LJ Hooker Dunedin agent Mandy Elliott said there was a lot of interest in the Palmerston area, and not just from Dunedin buyers.

Mrs Elliott, who lives in Palmerston, was getting inquiries from as far away as Auckland, and a lot of OceanaGold Macraes mine employees were choosing to base themselves in the Waitaki town, rather than commute from Dunedin or Oamaru.

House prices in Palmerston had also increased in a big way, Mrs Elliott said.

When she started her career in real estate about six years ago, it was easy to find a house for less than $200,000.

Now, the average price was closer to $350,000, she said.

The number of houses on the market was ‘‘steady’’, but the town could benefit from a new subdivision.

‘‘It would be good to see some new [houses] come into the area.’’

SKYHIGH property prices in Queenstown are being boosted by Australians and overseas Kiwis buying houses without stepping foot in the resort.

In December the average house price in QueenstownLakes tipped over the $1 million mark for the first time, with an 8.2% increase on the previous year, according to Real Estate Institute New Zealand.

It means Queenstown remains one of the most expensive places in the country to buy a house — well ahead of the national average of $675,000.

Local agents said expats had been sending proxies to viewings, as they looked to return home earlier than planned or make sound investments in the pandemicstruck world.

Colliers director for residential sales Fred Bramwell said inquiries from Aucklandbased buyers were also up, about 10%12% compared with last year.

Some were looking for second homes, while others were firsttime buyers or looking to move to the resort and away from urban life.

‘‘I think there are a mix of people who now no longer have to work in the office . . . Covid has jumped us forward 10 years.’’

In recent weeks he had had conversations with New Zealanders in the United Kingdom, United States, Switzerland and Hong Kong about purchases in the resort.

‘‘Some of these people are buying without seeing, getting friends and family to do due diligence.’’

He said land lots, such as in Kelvin Heights, were proving popular with absentee buyers.

But he did not believe these were speculators looking to flip properties — rather they were longerterm investments.

Both Mr Bramwell and Bas Smith, of Ray White, said Australians were particularly eager to buy property in Queenstown.

The latter said his firm had already tied up several ‘‘impressive’’ deals with Australians familiar with the resort.

Mr Smith said there was a general feeling the ‘‘world’s eyes’’ were on New Zealand for investment opportunities.

‘‘Obviously we have a foreign buyer ban . . . but there is a feeling in Queenstown there will be an influx of Aussie buyers when that border is open.’’

He said about 50% of inquiries were from out of town, but were not strictly limited to Auckland, as there were people from Christchurch and Dunedin also wanting to invest in Queenstown.

‘‘Kiwis are falling in love with their country and I think people who do have money and would otherwise travel . . . are looking at real estate.’’

He tipped Fernhill to become the next upandcoming suburb for the housing market, as some landlords ditched the rental market because of more stringent demands on housing quality.

‘‘You sort of forget how, arguably, it has some of the best views in the world, with the lake and The Remarkables.’’

He said people could look to combine some units to create newer, bigger homes.

Real Estate Institute New Zealand reported median house prices in Queenstown rose from $970,000 in December 2019 to $1,050,000 last month, as properties sold faster than ever.

The average QueenstownLakes house price was $10,000 higher than in Auckland, although some suburbs such as the CBD and North Shore had started to tip the $1.3 million mark.

Dunedin had a sharp rise in house prices, despite remaining on average nearly half that of Queenstown’s values.

The institute’s regional commentator, Liz Nidd, said median prices had increased 18.8% from $492,000 to $585,000 in the last 12 months.

AUCKLAND: National house prices set records for the fourth month in a row in December, according to the Real Estate Institute, which released new data yesterday.

Sales in the Christmas month set a new median house price of $749,000, which chief executive Bindi Norwell said continued the pattern. In December 2019, the national median house price was $628,000.

However, the number of houses on the market had plummeted, putting further pressure on the stretched sector.

‘‘As the total pool of properties available for sale falls to record lows, this is continuing to put pressure on house prices, with the country seeing a new record median house price for the fourth month in a row,’’ REINZ said of its new data.

National house prices could rise by as much as 13% to 16% in the next few months.

Westpac, ASB, BNZ and Kiwi

bank economists say low interest rates and high demand will continue to have an effect this year.

The economists’ predictions vary, but they agree 2021’s housing market will build on records set last year. These predictions come despite the Reserve Bank’s scheduled introduction of tougher lending rules for investors in March.

Ms Norwell said 8935 properties were sold nationally last month, up 2392 on December 2019.

‘‘That’s an additional 77 properties sold every day in December, which is a pretty remarkable result and shows what a strong position the property market finished 2020 in,’’ she said.

She said low listings pressured the market.

‘‘We have half the inventory levels of December 2018, therefore, there just isn’t enough choice for people looking to purchase which has meant that there is significant pressure being placed on house prices in most parts of the country.

‘‘When you add into the equation the fact that there are record low interest rates, it means that people are more willing to compete to secure the property they want.’’

Lack of choice and high confidence levels resulted in properties being sold at the quickest pace in 17 years.

The median number of days to sell was just 27 days when it was usually above 30.

Owen Vaughan, editor of NZMEowned property listing site OneRoof.co.nz, said buyer demand outstripping supply had been a big challenge for the market since the country came out of the Covid19 lockdown.

‘‘Summer is traditionally a quiet time in real estate but OneRoof figures show buyer inquiry for December and the first two weeks of January significantly up on the same period last year,’’ Mr Vaughan said.

‘‘Buyers are scrambling to make the most of low interest rates and there’s been huge interest in the limited stock that is available, with agents in Auckland reporting packed open homes last weekend.

‘‘This will put upward pressure on prices, and buyers should expect that heat won’t leave the market any time soon,’’ he said.

The REINZ House Price Index, which measures the changing value of property, rose 17.3% annually to 3417, a new high.

Eleven regions had had doubledigit annual growth, the first time in 15 years the index had been that strong, REINZ said.

Auckland’s median house price jumped 17.4% annually from $886,000 in December, 2019 to $1,040,000 last month. That was a record and the fifth consecutive month Auckland had set a new record median house price.

Gisborne’s median annual house price jumped 43.9%, from $410,000 in December 2019 to $590,000 last month; West Coast’s median rose 31.9% from $216,000 to $285,000, ManawatuWhanganui was up 31.3% from $402,000 to $528,000; Hawke’s Bay up 27.3% from $520,000 to $662,000; Northland up 25.2% from $539,000 to $675,000; Taranaki up 19.6% from $418,000 to $500,000; Wellington up 18.6% from $685,000 to $812,251; Waikato up 17.4% from $575,000 to $675,000.

Canterbury’s median annual price jumped 16.5% from $460,000 to $536,000.

Nelson’s median rose 12.7% from $605,000 to $682,000.

On January 6, Auckland’s biggest agency released its December data which showed 1479 sales for an average $1,092,518 and median $1,005,000, Barfoot & Thompson said.

That was almost a record December and the sixth month the agency had sold 1000 homes.

‘‘Only once before have we sold more than 1000 homes in a December and that was in 2014 when the market was building towards the peak of the last price cycle,’’ managing director Peter Thompson said.

On January 5, CoreLogic said the market showed no signs of letting up and nearrecord growth was registered nationally in December.

National annual house values had risen 2.6% in that month alone, and the final quarter was up 6.1%, a rate not bettered since 2004.

ASB economists noted yesterday that residential consents for the November 2020 year rose to 38,604, the highest since 1974.

Consents were issued for 16,293 Auckland projects in the year, the highest on record.

‘‘Strong construction activity and slowing population due to the border restrictions should act to bring the housing market more into balance and help cool house prices.’’

New Zealand now also had 2.3 million paid jobs in the year to December, a record which illustrated the economy’s resilience, ASB said. — The New Zealand Herald