Prior to Covid19, the Napier residential property market was the most active we had seen for years. Reflective of this strong activity property values rose risen sharply, in fact the most rapid rise in values since 2007. Values were driven by increased buyer demand. Most buyers were locals, taking advantage of lower interest rates, strong economy and stirred on by positive media reports. Buyer deposits, from Kiwisaver withdrawals for first home buyers, were also assisting the market.
The effect of Covid19 on the Napier market is as yet unclear, however the economic impacts of Covid19 will be widely felt. Napier is strongly influenced by tourism, a sector which will be hard hit. That said, the local rural economy, which should perform well despite Covid19, is also important to Napier’s economy and will help soften any negative impact in the local economy.
Consumer confidence has taken a battering due to Covid19. However, the Horticulture and agriculture sectors remain strong. In addition, competitive interest rates, and slight easing of Reserve Bank lending rules will assist. The willingness of the Banking industry to lend may well have an impact of where the market heads from here.
The market remained relatively flat from the Global Financial Crisis up till about May 2015. However, between 2015 and Covid19 the market experienced a dramatic increase in values, with regional growth being some of the highest experienced throughout New Zealand.
The majority of sales have been between $400,000 and $500,000 in Napier, which shows Napier has strong appeal for first home buyers, who represented around quarter of mortgage registrations.
Over the past decade or two, market demand has increased for four bedroomed dwellings. Demand has outpaced new supply and has placed some additional value premium on four–bedroom plus homes. As the household composition has changed over the years with an increase in larger blended families. Equally we are seeing an increase in demand for one and two bedroomed dwellings as people downsize. An on-flow result with number of “baby boomers” increasing demand, in addition resulting in an increased competition from more modern retirement villages and quality apartments.
Leasehold property in Napier tends to experience less market resistance within the strong market. We recommend obtaining sound valuation advice if looking to purchase a leasehold property, whether you intend to freehold it or lease it in leasehold tenure.
Investment market had performed well with the market experiencing strong growth, through both reducing yields (capitalisation rates) and rising rents. This is unlikely to continue but cashed up investors are expected to seek ‘bargains’.
If you are looking for a property valuer, with expertise in the Napier market, call one of our registered valuers today.