Commentary
The Napier residential property market is probably the most active we have seen for years. And with that we are also seeing rising values, in fact the most rapid rise in values we have seen since 2007. Values are being driven by increased buyer demand. Most buyers are locals, taking advantage of lower interest rates, and stirred on by positive media reports. Much has been made in the media about out of town investors driving the market. Our opinion is that the impact of out of town investors is relatively minor, but playing some part. Because much of this movement has been very recent, some of the charts are not yet obviously depicting the movement, due to a delay in publishing some sales data.
The market underwent considerable growth between 2002 and 2007, however value levels remained relatively stable up till about May 2015. The median sale price increases in the last few years result partly from new housing stock and a modest across-the-board increase in values.
Crosslease property has not performed as well as freehold property. Values rose more modestly during the property boom and have remained stable since.
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 homes. Market values for three bedroom dwellings have been relatively stable in recent years, with a median sale price typically between $90,000 and $130,000 below four bedroom dwellings (note: they are typically larger and of superior quality). Two bedroom dwellings have experienced little value growth since 2007, and typically trade between $30,000 and $40,000 below three bedroom dwellings.
Crosslease property (typically two bedroom residential units on smaller partially shared sections) has experienced a growing discrepancy below freehold values. A discount of around 23% to 26% had been the norm, however more recently the discount has grown to over 30%. The crosslease housing stock is ageing and also predominantly being two bedrooms is experiencing reduced demand and increased competition from more modern retirement villages and quality apartments.
Leasehold property in Napier tends to experience some market resistance over and above the discount which could be expected on purely economic grounds. This often makes it viable to purchase a lessors interest in the property, in order to freehold the property. We recommend obtaining sound valuation advice if looking to freehold a property.
Newer dwellings tend to depreciate faster than older dwellings. Values for newer homes tend to be the highest. Values for 1990s built homes in Napier are typically around $50,000 to $100,000 lower than similar quality 2000’s built homes. The exception are character homes, as typically seen in Napier South and on Napier Hill, which hold their value well, and tend to respond appropriately in terms of value increases to maintenance and modernisation.
Statistics are just a guide however, and there is no replacement for comparing the property to specifically selected comparable sales. If you are looking for a property valuer, with expertise in the Napier market, call one of our registered valuers today.
