Time to buy Hawke's Bay homes

A 10 per cent drop in Hastings house prices has made some homes more affordable, while Napier has followed a national trend of homes increasingly escaping the reach of first-home buyers.

The dip in house prices last month helped improve home loan affordability in Hastings while Napier became less affordable, according to the report. However, price increases are projected to spread to Hawke's Bay and other provinces as affordability continues to deteriorate in Auckland and Christchurch with house prices surging.

The Roost Home Loan Affordability index for April shows it now takes 43.3 per cent of one median income to pay the mortgage on a median priced Hastings house, a 4.8 per cent improvement from March's 48.1 per cent.

In Napier it takes 50.7 per cent of one income to pay the mortgage, up from March's 47.3 per cent.

A typical buyer is assumed to be in the 30-34 age group.

Hawke's Bay Property Brokers regional manager Paul Whitaker said the increases seen in the bigger cities will eventually reach the region but now was a good time to buy as "we have scraped the bottom of the curve" in prices.

"Urban sprawl will get to Hawke's Bay in time, but I think it will take some time. In every boom it's normally the big cities that get it first, " he said. "Property will never be cheaper and there are signals interest rates are going up. The low interest rates at the moment are something I don't think we will see again for the next five years.

"It's a good opportunity for people, nobody knows exactly how much or how fast prices will go up."

Nationally there had been a dip in April house prices but the traditional leader of house prices across the nation, Auckland, shows affordability to be at its worst level in three years after a 10 per cent rise in house prices last year.

The surge is expected to spread to provinces such as Hawke's Bay, with industry commentators urging people to buy now while interest rates are low if they want to get onto the property ladder.

Leaders real estate director Elanor MacDonald said: "I think it will follow in time and improve rather than stay flat but will not reach the heights of the larger cities.

"At the moment there is a bit of a shortage in the medium price bracket," she said. "But I can't imagine they will get any cheaper so now would be a good time to get in."

Tremains Real Estate Limited managing director Simon Tremain said Auckland and Christchurch were way ahead of the rest of the country in terms of prices and it would depend on the growth of the Hawke's Bay economy and population as to whether it reached those heights.

"It's more supply reality at the moment - we don't have the population growth or the buyer demand. Auckland has the growth and Christchurch has the demand."

He said the province remained a very affordable place for people to buy compared with the rest of the country and the recent government budget would help provide people with low-cost housing in the rural regions.

"Hawke's Bay is a good place for first home buyers," he said. "It's a good place for its lifestyle and a good place to raise a family."

Only interest rates remaining near record lows were stopping a further worsening, the Roost Home Loan Affordability report showed.

The median income for the typical buyer in Napier and Hastings, aged 30-34, was not high enough to buy a median priced house, even with a 20 per cent deposit.