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Hawkes Bay house prices drop

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  • Hawkes Bay house prices drop

    Bay house prices drop

    A small drop in the average sale price of a Hawke's Bay house could continue to as much as five percent within the next three years, the BNZ's chief economist has warned.

    Tony Alexander was commenting on the Real Estate Institute of New Zealand's latest figures which showed a $3753 drop in the average Hawke's Bay house price over the past month and houses taking eight days longer to sell but an increase in the number of houses sold by 53.

    The average Hawke's Bay house price had dropped from $253,753 to $250,000 in the past month. The figures remain well up on the $196,100 median price attained in September 2004.

    Mr Alexander's comments are in line with those of Reserve Bank governor Alan Bollard, who last week warned that house prices were not sustainable and an outright fall was likely. Mr Alexander said prices had reached a plateau.
    "Hawke's Bay really does not stick out compared to other parts of the country," he said. "The last time prices did this was between 1997 and 2001."

    Mr Alexander said turnover was also in line with other parts of the country, after sales increased in Hawke's Bay in September, with 343 houses sold during the month, compared to 290 in August. Houses are sitting on the market for longer, with the average house taking 40 days to sell in September, compared to 32 in August and 26 in September 2003.

    But the president of the Hawke's Bay branch of the institute, real estate agent Paul Harvey, thinks Mr Alexander's predictions are unlikely and prices could climb to around 8 percent by the end of the year.

    "We are approaching spring and there's a lot more homes on the market. It's a very strong market place in Hawke's Bay. Very stable. We are going to continue to see this strong but steady growth in values."

    He based his predictions on the strong Hawke's Bay economy, which was a result of Wine Country branding and tourism, which had given the region identity.

    "I think it's really bought the region together," he said. "We have got good employment and people are secure in their jobs. People are still moving to the area from outside," he said.

    "A major growth for September occurred in the Napier market place, and that spurt of sales was right across the board." Malcolm Cox, of Cox Partners Estate Agents in Napier, said the most useful way to view the statistics was to look at the trends, rather than read too much into the monthly data.

    "The local trends indicate a definite levelling in the local property market," he said.

    Mr Cox said he was expecting the market to be affected by rising interest rates and falling migration.

    "When economic growth slows and unemployment rises (as is predicted), times get tougher and New Zealanders leave for Australia, and so, migration is expected to worsen in the next 18 months, and this will negatively affect the housing market.

    "In Hawke's Bay we are also vulnerable because the high Kiwi dollar undermines our horticultural, forestry, and tourism industries."

    News source
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