When it comes to real estate in New Zealand, cities continue to be the main target of residential investors. QV's monthly residential index for December recorded a 16.4 per cent year-on-year increase in average housing values in the country's main urban centres. On this note, it's not surprising that buyers immediately look to Auckland as the go-to city - the country's most economically prominent and populated region.
Areas like Manukau City, Waitakere City and Papakura District all saw immense housing growth as people began reaching outward from central Auckland for property.
QV's index reported a 22.5 per cent jump in average dwelling value in the 12 months to December, racing far ahead of the urban average. Furthermore, areas like Manukau City, Waitakere City and Papakura District all saw immense housing growth as people began reaching outward from central Auckland for property.
However, with affordability issues on the rise, not everyone can afford a piece of the pie that is real estate in Auckland. With this in mind, where else can investors look in the North Island to find property that could offer great returns?
Outside the box
When it comes to finding an investment property for sale outside Auckland, the Waikato/Bay of Plenty region springs to mind for many. The Real Estate Institute of New Zealand (REINZ) calls this the 'halo effect', which describes how those who cannot afford to buy into Auckland will instead look at directly surrounding areas. This has caused property in this area to rise in value, though a January 20 release by the REINZ says there seems to also be other factors at work.
According to the organisation's regional commentary, the volume of property sales rose sharply by 38 per cent in the 12 months to November 2015. Rotorua took the cake, seeing a staggering 84 per cent boost, while Eastern Bay of Plenty Country recorded a 56 per cent increase. The sales volumes in Taupo also jumped impressively by 47 per cent.
Tauranga and Hamilton City both saw a respective increase in dwelling median prices of 15.4 per cent and 11.8 per cent.
Hamilton and Tauranga
While sales activity has obviously grown in momentum, what sort of capital gains have vendors been seeing? REINZ reports that the median price of homes across the entire region increased by 9 per cent (or $32,500) in the past 12 months.
In this region, there were actually two urban centres that showed impressive property growth. Tauranga and Hamilton City both saw a respective increase in dwelling median prices of 15.4 per cent and 11.8 per cent. This has pushed them up to $450,000 and $4250,000 respectively. Considering the Auckland region had growth of 14.2 per cent in this period, it's a testament to the increasing strength of these markets.
In the long run, this activity is unlikely to slow down, either. For instance, there is a huge number of redevelopment objectives lined up for Hamilton. The Transformation Plan published by its city council reveals that there is an aim to "transform Hamilton's central city into a more vibrant prosperous centre for the Waikato".
Hamilton aims to build its visual identity by developing a network of laneways.
For a while, there have been concerns over the relative lack of bustle and new development in Hamilton's urban centre. The council aims to remedy this by consolidating shops into a specific retail area, while creating a balance of both franchises and independent stores.
Furthermore, Hamilton aims to build its visual identity by developing a network of laneways to act as enjoyable pedestrian-friendly spaces while providing room for new businesses.
As more and more people have already been making Hamilton their home, this proposed plan could be just the spark to light a full-scale blaze of investment and renewed interest. Consequently, this will help to push up property prices of homes for sale in the region.
