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Bay of Plenty asking prices benefit from 'the Auckland effect'

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Fuseworks Media
Fuseworks Media

The phenomenon known as the ‘Auckland effect’ has infiltrated the Bay of Plenty property for sale market and it has become the second most expensive region to buy a house, according to October’s Trade Me Property Price Index.

Head of Trade Me Property Nigel Jeffries said the Auckland effect had seen average asking prices climb by $4,000 per month over the past year in the Bay of Plenty. "Prices have risen 25 per cent over the past five years, and the bulk of that has been since October 2012. Last month alone we saw selling price expectations for a typical property up by $11,400 since last month, breaking records and landing at a new high of $483,000."

He said the average asking price for a typical house in the region had increased by $105,000 over the past three years, up from $377,600. "The Bay of Plenty is the second most expensive region in New Zealand to buy a house, behind Auckland but ahead of Wellington, Canterbury and the Nelson Tasman region."

Meanwhile Auckland eases

Mr Jeffries said the Auckland for sale market was showing clear signs of slowing, despite prices edging toward the $800,000 mark.

"Average asking prices ticked up just over 2 per cent in the past month to $792,000 for a typical Auckland property. It now looks like the peak for year-on-year growth was July’s 20 per cent leap. Over the past four months we’ve watched that slip back to 18 per cent. It’s worth noting this adds up to a $121,000 increase in Auckland asking prices since July so it’s still far from sluggish."

Over the past five years, the average asking price for a typical Auckland property has increased by $305,000 or 62.6 per cent.

Outside the Super City

Average asking prices outside Auckland rose 3.8 per cent in October, and Mr Jeffries said this was the biggest single monthly increase over the past five years. "The monthly change in the Index bucks a recent downward trend outside Auckland with average asking prices jumping to a new high of $424,100. That’s added another $15,450 to what sellers were chasing a year ago."

Mr Jeffries said the Bay of Plenty, Nelson and Hawke’s Bay were key drivers of the regional growth. "Average asking prices in these areas are relatively modest, demonstrated by the five-year growth of 22 per cent."

Stronger property market across the regions

While three regions saw declines in expected selling price over the past year, Mr Jeffries said the overall sentiment was favorable. "Eight regions are showing average asking price increases above 5 per cent, while regions like Gisborne, Taranaki and Manawatu have seen a dip but are a bit smaller and more volatile. Over recent months, these regions have seen as many rises as falls."

The fastest-growing regions included the Hawke’s Bay up 19.7 per cent to a new peak at $436,350, Waikato up 11 per cent to $388,500, and Bay of Plenty up 11 per cent to a new record of $483,000.

Mr Jeffries said the West Coast has been "pretty subdued" for most of the year, but showed growth with a 13.8 per cent increase in average asking prices this month. Prices reached a new high of $287,700, and added $35,000 to the average asking price of a typical property.

By house size

Mr Jeffries said there was little differentiating house sizes in terms of movement in average asking prices. "Excluding the Auckland effect, small, medium and large houses are tracking up by three to four per cent when compared to the previous year. Those figures lift significantly when you add the Auckland data, but remain pretty consistent at around 17 to 20 per cent year-on-year."

In Wellington, small houses (1-2 bedroom) continued their year-on-year decline for the fourth month in a row, down 5.8 per cent and representing an $18,900 drop in average asking price.

Urban living continues to lead the market

Auckland apartment prices continue to rise, with the average asking prices of a typical apartment lifting 43 per cent on the previous year to $573,850. "Apartment prices in Auckland are up $20,600 in the last month alone, and a huge $172,450 on the previous year. To put that in perspective, that scale of increase is equivalent to the current asking price of a small house in Manawatu or Southland," Mr Jeffries said.

Units showed similar growth in average asking prices, up 23.4 per cent to $552,200 over the past 12 months, below September’s record figure, but still up almost $105,000.

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