The Hawkes Bay Region’s economy has performed robustly over the last year underpinned by the rural and viticulture sectors. According to the ANZ Bank, economic activity in the region expanded for the second successive year. ANZ reports that in the year to September economic activity in the region grew by 2.5%. Employment in the region also grew, with just over 1,600 new jobs being generated which saw the unemployment rate falling from 8.5%, in September 2013 to 7.1% in the third quarter of 2014.Both business and consumer confidence within the region remain at elevated levels.
Against the positive economic backdrop the region’s property market has remained steady over the last year. Sales activity dipped in the June quarter but has rebounded subsequently. Sales increased by just over 10% in the September quarter. Prospects for the lift in sales activity being maintained are positive with the number of new listings being brought to the market surging in October.
Median sales values have remained steady for an extended period, fluctuating, on a quarterly basis, within a narrow band. The regional median sales value in the September quarter stood at $275,000 the same level as was recorded in September 2013 according to sales statistics released by the Real Estate Institute of New Zealand (REINZ).Agency reports suggest that one of the primary reasons for the subdued levels of sales activity experienced over recent months has been a shortage of property being made available to the market. The number of new properties brought to market on a monthly basis across Hawkes Bay has averaged 418 over the last seven years. During the course of 2014 the average has been only 337, with under 300 new listings having been brought to market in both June and July. This has resulted in a tightening of the market. realestate.co.nz illustrate this by calculating the number of weeks worth of property that is currently on the market. This takes account of the volume of sales taking place and the number of new listings being introduced to the market. The seven year average for the Hawkes Bay Region is 39.2 weeks. As of October the figure stood at just 32.1 weeks having fallen from 45 weeks as recently as July.
As mentioned above October saw a significant lift in new listings, 427 new properties were offered for sale, the highest monthly total since November 2013.
The regional lift in listings mirrors the national trend with their being speculation that many potential vendors had decided to await the result of the national election before committing to a sales process.
Net Migration Turns Positive
Annual net migration to New Zealand hit a new national record in October with the number of new arrivals surpassing total departures by 47,700. While the impact of the migration boom is felt most profoundly in Auckland, where 46% of migrants settle, all regions, with the exception of Gisborne, have experienced a net gain over the year to October.
In Hawkes Bay net migration for the period totalled 113, compared to a net loss of 1,119 residents just two years earlier. While the net figure is small it is clear that migration is helping to support activity in the market as the total figure comprises new arrivals, 1,692 in the year to October, and those leaving the area, 1,579. Migrants are therefore adding to the pool of purchasers albeit that the market continues to be dominated by local buyers.
Local Market Snapshots
Napier CityThe Napier City market accounted for 42% of regional sales in the year to September 2014 making it the largest of the local markets.
The Napier market mirrors many of the regional trends with September quarter sales lifting following a soft June quarter. Napier however has experienced value growth over the year with the September 2014 median sitting at 320,000 up from $299,500 in September 2013.
The smaller volume of sales which occur within Havelock North means that sales statistics tend to be more volatile. It is however, clear that there has been significant upward pressure on prices over the last 12-18 months.
The median sales price recorded over the six months ending in June was $450,000, surpassing, for the first time the pre Global Financial Crisis (GFC) high of $442,500 which was recorded in the second half of 2007.
Sales in the last three months indicate that the rise in values has been maintained with the median for the June to September period sitting at a new high of $457,500.
Hastings CityThe level of sales activity within Hastings City has remained steady over the last two years. In the 2010 calendar year the number of completed sales fell to 369, as the city, in line with the rest of the country, adjusted to the economic recession.
In 2013 the annual total lifted to 439. In the opening six months of 2014 REINZ recorded 230 sales in the city, figures for the period through to September indicate that the sales momentum has been maintained with 120 transactions having been completed. Should this be mirrored in the final quarter of the year, annual sales may top the 2012 total of 483 sales a figure which has not been matched since 2007.
The median sales value generated in the first half of 2014 was $250,000 which was unchanged from the preceding six months, just $7,750 below the record six monthly figure reached in the second half of 2007.
Looking at the main drivers of the property market the outlook for the year ahead remains positive. The latest New Zealand Institute of Economic Research (NZIER) forecasts predict the national GDP to grow by 3.4% this year.
While dairy prices have been under considerable downward pressure recently, beef and lamb meat prices remain at elevated levels and the viticulture sector has experienced another strong year, all of which is positive for the Hawkes Bay region.
The Official Cash Rate (OCR) which was, earlier this year, expected to top 4% by the close of the year, has been on hold at, an historically low, 3.5%since July and most economic forecasters now expect this level to be maintained well into 2015, if not 2016.
Net migration flows are set to remain at elevated levels over the short term future stimulating activity in the market.
Taking the above factors into account the general economic backdrop for the property market remains positive and it is likely therefore that increased levels of activity will become apparent with mild upward pressure on prices.