There'll be "damn good" buying possibilities in these areas, according to experts
Industry experts have revealed where they think buying will be good in 2023.
James Wilson, head of valuations for Valocity, said when prices in Auckland become too expensive, people turn to the next urban location – a trend he believed would reverse, with locations nearer the central city likely to become more affordable.
Over the past two years, a “sort of concentric rings theory” has prevailed in NZ, with people spreading out from Auckland to Hamilton and Tauranga then on to the regions, such as Hawke’s Bay and Gisborne; but with the current softer market, Wilson said people should consider going back towards centres, OneRoof reported.
“Make that next purchase as close to a big economic centre as you can do because that’s where New Zealand traditionally performs the best, so markets don’t tend to go down as far or for as long, as opposed to the regions, which can be far more exposed to housing market shocks,” he said.
One area Wilson highlighted was Hamilton central, where he said rental rates were strong for investors.
“I think Hamilton has a lot to offer,” he said. “It stacks up quite nicely as an investment and with decreased competition I think there are some people making some pretty good buys around there.”
Another area that could also be good buying was the central Auckland suburbs, especially the “golden ring” suburbs on the fringe of the CBD, such as Ellerslie, Onehunga, Three Kings on the southern and southwestern fringe, and suburbs like Mt Roskill on the western side of the city.
These areas, Wilson said, have good public transport to bring people back to the CBD for work, and going back to the CBD was a global trend, OneRoof reported.
Established central areas also have good amenities, and because of less competition, these are attractive to both investors and first-home buyers.
“The thumb should always be ‘buy as closely as you can to the heart of urban areas,’ which is typically where you will get the best long-term returns,” he said. “First-home buyers have been happy to rule out those central locations for the last few years but now it’s time to have a look because they might be surprised what less competition does for them in those areas.”
Kelvin Davidson, chief economist at CoreLogic, said that although Wellington had been the hardest hit of NZ’s major metros, there’ll still be “damn good” opportunities there.
Davidson said that while there would be price declines in most parts of the country in 2023, some areas would see less.
One attractive location for buyers was Canterbury, which was among the less vulnerable, including Ashburton, Timaru, and Waimakariri.
These areas have remained resilient due to prices not increasing as much in the first place, and because affordability was better, Davidson said.
They have solid agricultural-based economies and people want to reside there.
Other isolated parts of the country have also held up well, such as Palmerston North, which according to Davidson also has better affordability.
“That’s not to say it will continue to do well but it’s been pretty resilient so far, so it could stay that way,” he said.
Buyers with an eye to the future should keep an eye on Auckland and Wellington. It’s because these larger cities that have fallen rapidly could hit the bottom faster and start to once again present opportunities.
“Let’s face it, Auckland is our biggest market and most diverse, it’s where our commercial centre is,” Davidson told OneRoof. “If net migration picks up, probably Auckland will benefit the most from that.”
The outer fringes could also offer some deals, given all the townhouse developments, especially if properties were already up for grabs and with the developers eager to free up cash to proceed with their next project.
In Wellington, Lower Hutt was one of the markets that saw the largest fall nationwide, and with the number of new builds in the suburb, there could be chances to pick up a bargain, Davidson said.
While prices were going down, the CoreLogic economist pointed out that property values would again rise, although he didn’t say when.
Sam Steele, Ray White’s lead auctioneer, thinks it’s worth keeping an eye on South Auckland, which posted “extraordinary” growth over the last two or three years, but with the market correcting itself, now offers the opportunity to get great value for money.
“What I mean by that is you can still get a sizeable house with a sizeable section in a reasonable area for well under $1m now,” Steele said.
First-home buyers who don’t want an apartment or an attached townhouse should look in the south of the city, Steele said.
“That was a market that was predominantly seven figures last year but it's well below that now,” he said. “We’re selling three-bedroom homes on about 500 or 600sqm sections in the $600,000 and $700,000s – places like Manurewa, Papatoetoe, Mangere.”
Lifestyle areas in the likes of Gisborne, Hawkes Bay, or Whangarei remained popular, especially for people seeking a quieter life who wanted their money to go a bit further.
“If you’re someone who’s selling up in Auckland or Christchurch and going to a market like that, your money is certainly going to go a lot further than what you can possibly secure anywhere else,” Steele said. “Obviously after that craziness of the last couple of years, prices in those centres have come back and it’s opening up that affordability, whether it’s to the first-home buyers or to established families.”
Steele said an $800,000 budget might buy a terraced house in Auckland but get four bedrooms and a backyard in Whangarei.
Christchurch was Steele’s pick when it comes to affordability, as the area offers the benefits of a large city but is much cheaper than Auckland or Wellington, OneRoof reported.
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