The humble town with NZ's hottest property market

Kawerau mayor Malcolm Campbell says the arrival of newcomers in town and growth in house prices over the past year is a breath of fresh air. Photo: Ben Fraser

Humble Kawerau, sitting close to thermal springs and the tourist delights of Rotorua and the Bay of Plenty, has emerged as New Zealand's best performing property market.

Home values in the small town of 6800 people jumped more than 25 per cent over the past year to a median price of $230,500, CoreLogic reports.

This was highest jump in the country ahead of Wairarapa town Featherston and Invercargill suburb Clifton, where home values both rose more than 20 per cent.

Parau and neighbouring Laingholm in Auckland's rural south-west were the two worst performing markets with home values falling more than five per cent.

The wider Auckland and Christchurch regions were home to all 10 of the country's worst performing markets.

Long-time Kawerau mayor Malcolm Campbell says the burst of activity in the town's housing market was a breath of fresh air.

Retirees from Auckland and Tauranga had been moving into town recently, drawn by the affordable prices, while tourism was growing and two major wood mill expansions were expected.

"Those newbies coming into town that is where the real positive stuff is happening, and there is quite a big expansion forecast for the next 12 months-to-two years also," he said.

"We are possibly looking at 1000 new jobs in the area."

Kawerau's growth indicates the best finds for buyers chasing capital gains may now be in the country's smaller towns rather than cities as markets like Auckland and Christchurch stagnate.

"Affordability is clearly a problem across Auckland," CoreLogic research analyst Kelvin Davidson said.

This was likely to have affected the higher-priced suburbs of Schnapper Rock and Flat Bush, which both featured among the list of the country's 10 worse performing markets, he said.

Home values in Schnapper Rock fell 4.4 per cent from $1,423,326 one year ago to $1,360,700 currently, while Flat Bush values dropped 3.1 per cent from $1,070,330 to $1,037,150.

By contrast, Porirua and the Wairarapa in the lower North Island were home to six of the 10 best performing markets, including Waitangirua, Cannons Creek, Ranui, Featherston, Greytown and Martinborough.

Each of the six towns recorded an at least 18 per cent growth in home values, partly due to increasing numbers of first home buyers being pushed out of Wellington, Davidson said.

"Anecdotally, Greytown has also become a trendy place to live with out-of-towner property demand significantly increased," he said.

"Better commute times - or at least the prospect of them in future - and improved acceptance of remote working will have also helped support property values in Porirua and south Wairarapa."

OneRoof editor Owen Vaughan said figures from the last six months clearly showed the market was entering a new phase.

"The market as a whole is in a lull and is past its peak. Affordability has become an issue in the main centres, forcing buyers further afield," he said.

"Satellite townships that offer value and an easy commute times are natural places for buyers to look - and the latest CoreLogic figures bear that out."

There had also been more buying and selling activity in the 10 best performing markets compared to the 10 worst performing markets.

In Kawerau, Featherston, Greytown and Martinborough, for instance, 10 per cent of each town's housing stock had changed hands over the past year.

This was likely driven by low starting prices in the towns and better affordability, Davidson said.

Apart from Greytown ($595,950) and Martinborough ($524,000), each of town in the list of 10 best performing markets had a median home value of about $400,000 or less.

Median prices in Invercargill's Clifton are less than $200,000.

"Being brutally frank, the prices had to go up, we were that cheap it was ridiculous," Kawerau mayor Campbell said.

Davidson said the overall picture to emerge from the latest report was one of rising home values across the North Island, except for in Auckland, with "softer trends in the South Island".