Why the regions house prices continue to rise

According to latest REINZ data, generally New Zealand house prices are still growing strongly unless you are in Auckland or Christchurch.

Why is this?

The most likely reason for this is during the last 4 -5 years, Auckland house prices saw a massive growth. Now with foreign buyers banned, tightening bank lending policies among other factors, Auckland house prices have stalled. However, they are still significantly higher than its neighbouring cities. This imbalance of house prices has been an advantage for people looking to sell their homes in Auckland and migrating to other neighbouring cities. The rise in the long distance commuting and gradual acceptance of working for home has also allowed younger couples to purchase homes outside Auckland yet technically still remain employed in Auckland.

Either for financial, lifestyle reasons or a combination of both, a portion of Auckland homeowners have sold their Auckland homes cashing in significant capital gains (often tax free). With this windfall, they then migrateĀ and purchase homes further south of Auckland such as Hamilton, Tauranga, Rotorua, Bay of Plenty. Because the supply of homes in the regions, is relatively fixed, the key driver of house prices will be demand. As demand increases, property prices have risen accordingly.

This trend has been steadily happening and has become more noticeable in the last year or so especially because Auckland’s house prices are dropping while other regions are rising.

Other younger families seeing that Auckland is becoming affordable look elsewhere for opportunities. And given the low interest rate environment, they can afford to buy houses in the regions. This too has pushed up demand and also contributed to rising house prices in the regions.

This trend shows the flow-on effect or ripple effect of the Auckland house prices have also benefited the regions.

back to home (Property Guide 360 .co.nz)