Cheaper houses fuel price hike

The lower end of the housing market has had the biggest increases in average value over the past year, including in Southland, but that is changing, new data shows.

Of the regional centres, the five biggest price increases over the year to March were all in the lower priced quarter of the market, according to Quotable Value.

The biggest price increases for properties in the cheapest quarter of the market were in Taupo (up 37.5 per cent to $417,322), Lower Hutt (up 35.5 per cent to $681,338), Napier (up 35.5 per cent to $570,435), Palmerston North (up 31.1 per cent to $512,971 ) and

Porirua (up 29.4 per cent to

$656,664).

Away from the regional centres, there was even stronger growth in the average values of entry-level houses, although it was partly because they were coming off a lower base value.

Ruapehu and Buller districts and Southland recorded increases of 72.4 per cent (to $244,234), 54.6 per cent (to $172,682), and 46.8 per cent (to $233,724) respectively over the past year.

QV general manager David Nagel said traditionally the lower end of the market was popular with first home buyers and investors. That meant it was no wonder first home buyers were feeling hard done by.

‘‘Just look at the size of those capital gains, which have been driven up, up, up by a lack of supply and a whole lot of competition between other first-home buyers and property investors.

‘‘It has been a very busy 12 months for first-home buyers and investors in particular. In the past year, the only [regional centres where the top end of the market outperformed the lower end were Tauranga, Queenstown, Upper Hutt, Rodney and Waitakere,’’ Nagel said.

However, recent CoreLogic buyer classification data showed that while first-home buyers were faring relatively well in terms of their number of purchases, their market share had dipped in recent months as they struggled to keep pace with investors.

Nagel said the figures indicated that price pressure might be shifting from the bottom quarter of the market to the top.

In the past three months, the upper end of the market outperformed the lower end in 41 per cent of the territorial authorities. That was up from 29 per cent over the past 12 months.

The Government’s recent measures to combat rampant house prices might lead to a slight cooling of the bottom 25 per cent of the market in the next few months, Nagel said.

‘‘This pause may give many first-home buyers the opportunity they need to get on the property ladder, but it’s hard to see prices coming down in a hurry, given that there’s still so much demand and not enough supply.’’

Price pressure would concentrate further up the property ladder, he said.

Westpac economists said this week that record-low interest rates meant there would still be willing buyers in the housing market, despite the Government policy changes for investors.

‘‘It has been a very busy 12 months for first-home buyers and investors . . .’’ David Nagel QV general manager