It's tough out in the regional towns and cities, and it will get tougher yet, reports Bruce Morris. But where are the places to buy?
Regional towns
THE QUARTER CLIMBERS % UP
1 Raglan 7.3%
2 Pukehina 5.8%
3= Kuratau and Te Puke 5.2%
5 Omori 5.1%
6 Melville 4.8%
7 Fairy Springs 4.3%
8 Putaruru 3.8%
9 Claudelands 3.6%
10 Tokoroa 2.7%
* List shows the areas recording the biggest house price gains in the three months to June 30, 2010. Source: QV's E-Valuer.
QUARTER SLIDERS % DOWN
1 Paeroa 12.9%
2 Kawerau 10.6%
3 Turangi 9.2%
4 Kaitaia 8.6%
5 Greerton 8.5%
6 Tauranga South 8.1%
7= Whakatane and Parkvale 7.4%
9 Brookfield 6.4%
10 Judea 6.3%
* List shows the areas recording the biggest house price drops in the three months to June 30, 2010. Source: QV's E-Valuer.
* From the New Zealand Herald's quarterly 'Property Report' - a guide to house prices and great places to live.
To get a feel for how disconcerting it can be for some home-owners living in provincial New Zealand, cast your eyes back to the data of a couple of years to what now seems almost like the good old days.
By June 2008, the housing market was well in decline as the world moved into recession. While it was starting to look very wobbly then, it has tracked in straight lines since. Downwards.
The data charts analysed by nzherald.co.nz using latest figures make sombre reading for a horde of home-owners who have seen tens of thousands of dollars wiped from the value of their prime assets.
For many of them in for the long haul, it may not matter. Over time, prices will recover and, while they're not as wealthy on paper as they once were, they still have a place to call home.
But people who climbed in through the later phases of the boom and now want to get out - to move town or ditch an investment property - will be hurting. Buying and selling in the same market may cushion the impact, but is not much comfort if initial deposits are swallowed up in the transaction, leaving negative equity.
The hefty decline in average values in provincial towns, as measured by QV's E-Valuer system, is right across the North Island, though seemingly more pronounced north of Taupo.
With warnings from some quarters there would be blood on the floor, prices were pushed in many areas well beyond rational value by investors from the cities chasing quick capital gain and anxious first-time buyers, both armed with easy credit.
When the economy turned for the worse, distressed sales and a lack of buyers acted in tandem to drag down values. Now climbing interest rates, continuing economic uncertainty and Government steps to move investment away from houses are adding to the slide.
The same thing has happened in the cities but the overall decline there has been more limited, especially in wider Auckland where a rising population helps to smooth such waves, and Hamilton.
Elsewhere values have fallen most in what might be called blue collar towns or areas. At the turn of the millennium houses in those centres were, relatively, very cheap and prices surged during the boom as investors competed with new-home buyers and up-graders.
That resulted in a closing of the price gap between well-regarded areas and poorer areas, but it was an aberration. Now the selling pressure means the traditional gap between "good" and "ordinary" areas is widening again - not because "knob hill" is appreciating, but because it is merely drifting in comparison to the slide of lesser towns or suburbs.
Centres such as Kaikohe (down 14.8 per cent over the two years), Paeroa (down 17.5 per cent), Taumarunui (down 15.1 per cent), Te Kuiti (down 18 per cent), Turangi (down 14.1 per cent) and Opotiki (down 13.7 per cent) have struggled, along with poorer suburbs in the cities. Worst of all is Kawerau, the depressed Bay of Plenty town where, in the last quarter alone, prices fell more than 10 per cent, bringing the two-year decline to 24.2 per cent.
With investors licking their wounds, demand is abysmal in those rural towns and the only homes selling are those whose owners have accepted things won't get better any time soon. A house will always sell if the price is cheap enough.
In the provincial cities, the smarter suburbs are hanging in more strongly than the cheaper areas but the overall impression now is of a flat market edging downwards with too few buyers chasing too many houses.
"It's very flat ... steady as she goes, with no bright spots that I can see," says Richard Allen, of QV Valuations in Hamilton where overall values are down 8.7 per cent since 2007. "Economic uncertainty coupled with the likelihood of further interest rate rises is continuing to dampen demand and stifle the residential market."
Over in the Bay of Plenty his Tauranga colleague, Shayne Donovan-Grammer, has no brighter news. After an overall decline in values of 10 per cent since the peak and capital gain unlikely over the next two or three years, investors are staying clear.
In the boom years, sections in some developments were balloted because of the insatiable demand?- a demand built of speculation rather than need, says Donovan-Grammer. He points to the excesses back then - such as people committing themselves to big prices in apartment developments and walking away at settlement three years later, losing
six-figure deposits.
In Northland, Kerikeri is a jewel where lifestyle and imported money have steadily pushed median prices above the levels of many Auckland suburbs. It is a prime and pretty spot with some affluence for a town where jobs are sparse. Here, it may be "the winterless north" but the cold economic winds have sliced 16 per cent from house values over the last two years - one of the North Island's worst records.
Bruce Holmes, Barfoot & Thompson's manager in Kerikeri, says there is no doubt prices went too high during the boom years and vendors now have to accept their properties are worth less.
He estimates close to 25 per cent of houses in the town are for sale - informally or otherwise - at the moment, but there aren't many buyers and they're picky. Virtually gone from the market is what his team calls "the swallows", the overseas buyers, mainly British, who in the past might have made up to 40 per cent of sales and helped to keep prices high.
But when the world economy picks up and New Zealand starts buzzing again, Holmes is confident the swallows will be back, along with Kiwis in search of lifestyle in a pleasant part of the country.
Some of the other smaller towns sprinkled through the North Island may not be quite so confident.
