13 May 2016

Auckland prices push house-buyers to regions

12:08 pm on 13 May 2016

House prices in provincial North Island towns are booming as first-home buyers, retirees and speculators are pushed out of the Auckland market and forced to hunt further afield.

A house with a large pond and a waterwheel in front of it in Kawerau

One of the more elaborate homes for sale in Kawerau, where prices have risen nearly 20 percent in the last year. Photo: Sneha Gray

In Otorohanga, 53km south of Hamilton, the average house price has risen 28 percent in the last two years to $230,000.

Mayor Max Baxter told Nine to Noon there was some concern about the dwindling number of rental properties available, but there was "no danger of anyone becoming homeless".

Overall, he saw the influx of newcomers as a big positive for the town.

"For years now we've heard about declining rural populations in our small communities so for us I see it as a really strong option going forward.

"If population grows, then business is attracted."

The council was considering several options for increasing housing supply, such as extending new subdivisions, Mr Baxter said.

The overheated Auckland market, which is pushing up prices outside the region, is troubling the Reserve Bank, which revealed this week it was considering debt-to-income restrictions. These would require government approval, and Finance Minister Bill English said he was open to the idea.

According to Quotable Value (QV), median house prices in the Bay of Plenty town of Kawerau, 100km south-east of Tauranga, have risen nearly 20 percent in the last year alone.

Its mayor, Malcolm Campbell, said the population boom was the "best thing that's happened to the town" in his 15 years as mayor.

"It's a breath of fresh air to be honest. Just looking at some of the trends here: 91 houses sold to new residents since September last year."

The town, which has a population of about 7000, could comfortably accommodate another 3000 with its current infrastructure, and its sewerage system had been built for 15,000.

At present, 47 percent of Kawerau residents were renting - but this trend was changing as more owner-occupiers arrived.

The council was also taking steps to ensure there were still enough rental properties for those who needed them.

Mr Campbell said the council was looking at buying up "anything the government has walked away from" and was working with local iwi to repair "tired" homes.

Local real estate agent Sneha Gray said some speculators looking to buy in the town, but many actually decided to move there once they had seen what Kawerau had to offer.

Many houses were also being snapped up by retirees, first-home buyers and professionals.

She and her husband were typical of many professional couples buying houses in Kawerau, she said.

"We can't dream of buying or building a house in Auckland, but we've just built an executive home here, and fingers crossed, as of today, we won't have a crippling mortgage either.

"And I'm finding that a lot of other professionals are also doing the same thing for the same reason."

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